Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/21132 
Year of Publication: 
2001
Series/Report no.: 
IZA Discussion Papers No. 280
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
This paper extends the standard model of life cycle consumption, saving and labor supply in a number of directions. First, it argues that consumption should be defined as expenditure on household production as well as on market goods, that is, we are interested in life cycle profiles of full consumption. If this is done, several well-known puzzles concerning life cycle consumption behaviour are resolved. Secondly, we stress the importance of the heterogeneity of household behaviour in respect of female labour supply and saving, and provide evidence to show that these are very closely related across households. Finally, we formulate theoretical and empirical models incorporating these ideas and use them to show that policy changes, such as a reduction in the progressivity of income taxation, can have effects that contrast sharply with those suggested in the existing literature.
Subjects: 
Saving
household production
full consumption
life cycle
JEL: 
D13
D91
H31
J22
Document Type: 
Working Paper

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