Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/20271 
Year of Publication: 
2004
Series/Report no.: 
IZA Discussion Papers No. 1036
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
This paper combines income and expenditure with time use data to provide a unique picture of the time paths of labour supplies, saving and full consumption for two-adult households over the life cycle. These data are used to test the life cycle model presented in the paper, at the core of which is the hypothesis that households face a borrowing interest rate that rises sharply with the amount of non collateral based borrowing. The household members jointly choose time paths of time use, consumption and saving over their life cycle in the face of this capital market imperfection. This model explains the data much better than does the alternative hypothesis of a perfect capital market. Finally, households are shown to differ significantly in their saving behaviour in a way that depends on secondary earner labour supply, with a strong positive association between saving and the secondary earner?s income.
Subjects: 
saving
labour supply
imperfect capital market
lifecycle
JEL: 
H31
D13
D91
J2
Document Type: 
Working Paper

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