Meghir: “Collective Labor Supply: Heterogeneity and Nonpartecipation

In this paper we extend the “collective ” model of labour supply developed by Chiappori (1988) to allow for discrete choices, censoring and nonpartici-pation in employment. We derive the collective restrictions on labour supply functions that we contrast with restrictions implied by the usual “unitary” framework. We apply our results to the estimation of a collective labor sup-ply model for married couples without children using UK data from 1979 to 1993. Taking into account unobserved heterogeneity, we use the log-linear labor supply framework. The implications of the unitary framework are re-jected while those of the collective approach are not. The estimates of the sharing rule show that wages have a strong influence on bargaining power within couples. ∗Acknowledgements: We are grateful to two anonymous referees, Francois Laisney, Jim Heck