And the winner is... An empirical evaluation of unitary and collective labour supply models

Abstract

An empirical evaluation is presented of two competing flexible labour supply models. The first is a standard unitary model, while the second is based on the collective approach to household behaviour. The evaluation focuses on the testing of the model’s? theoretical implications and on their ability to identify structural information, like preferences and the intrahousehold allocation process. Models are applied to Dutch microdata from the DNB Household Survey. The unitary model cannot be rejected for male and female singles, while it is rejected for a sample of couples. The alternative collective model cannot be rejected for the same sample, allowing identification of individual preferences and an intrahousehold sharing rule that can be used as a basis for welfare economic policy evaluations.