Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/202699 
Year of Publication: 
2019
Series/Report no.: 
IZA Discussion Papers No. 12353
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
This paper adopts an intertemporal labor supply perspective to propose a test that allows us to distinguish between intra-household non-commitment, limited commitment, and full commitment. It investigates whether, after controling for current and future (expected) wages, past wage shocks have a lasting and significant impact on present labor supply and public consumption. Using a semi-log parametrization of labor supply and data from the Panel Study of Income Dynamics for the US, the paper shows positive evidence in favor of the limited commitment model. Specifically, unexpected past wage shocks affect labor supply in exactly the way predicted by theory, as spouses' past wage deviations have a negative impact on their labor supply and a positive impact on their spouses'. In addition, wives' past wage shocks also impact negatively household public expenditure on housing.
Subjects: 
collective model
intertemporal labor supply
intra-household commitment
PSID
JEL: 
D15
J22
Document Type: 
Working Paper

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