Intra-household Allocation of Time and Resources: Empirical Evidence on a Sample of Italian Household with Young Children

This paper examines the labour supply decision of the household when the presence of pre-school children, creating non-separabilities in the use of time, is explicitly taken into account. A set of nested tests is obtained from the standard household utility model and from the collective one, both including a household production function measuring the quality of time provided to the children. The application of the tests to a sample of Italian households shows that the collective model cannot be rejected. We also find evidence against the income pooling hypothesis and against the Slutsky inter-person symmetry condition. However, the identification of the income parameters shows that the distribution of the household non-labour income does not affect the household’s labour supply system. We also provide a measure of the bias implicit in the standard household utility approach, by comparing the labour supply elasticiticies obtained from the two models