Abstract
This paper provides an empirical investigation on the individual labor supply of Iranian spouses in an intra-household collective decision framework in which gender ratio and divorce rate play a central role for resource allocation of household. The dataset is taken from the Households’ Expenditures Survey (2008) and the Annual Statistical Yearbook (2008) of Iran. I have conducted the parameters estimation and hypothesis testing using switching regression technique to catch the presence of the widespread non-participation of spouses across Iranian households. Reduced forms of labor supply are estimated considering the endogeneity of wage rates. The findings show that the unitary model of resource allocation and the collective model of decision process under Iranian civil procedure rules are strongly rejected, but the Pareto efficiency in the family resource allocation and validity of the specified model are confirmed. Furthermore, the coherency condition of labor supply reduced forms is satisfied. The structural labor supplies are derived from the reduced forms, and they indicate that leisure is a normal good for spouses. They also show the cross elasticity of a wife’s labor supply with respect to her husband’s wage is negative. The calculated marginal effect of non-labor income on the wife’s share is 0.76. The gender ratio and the divorce rate are both significant determinants of the sharing rule and the estimated coefficients of these variables are consistent with theoretical considerations.
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Notes
According to the civil procedures of Iran, groom should accept a commitment according which he should pay a dower upon to request of the bride during their life or when she wants to get divorce. The dower usually is determined by real estate or golden coins which by norm amounts to 250 ounce. Moreover, if the divorce is initiated by husband, he should pay half of all their properties and assets to his wife.
In a well-described survey, (Xu 2007) categorizes the intra-household models and its empirical evidence.
Note that housewives and students are excluded from the sample, and all individuals with non-zero working hour are considered as employed.
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Haddad, G.K. Gender ratio, divorce rate, and intra-household collective decision process: evidence from iranian urban households labor supply with non-participation. Empir Econ 48, 1365–1394 (2015). https://doi.org/10.1007/s00181-014-0828-4
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DOI: https://doi.org/10.1007/s00181-014-0828-4