An Empirical Model of Collective Household Labour Supply with Nonparticipation, Economic Journal (forthcoming

We present a structural empirical model of collective household labour supply. Following recent developments in the literature on collective household labour sup-ply our model allows for the nonparticipation decision, along with with the choice of working hours. We use the theoretical framework for the specification of a simul-taneous model for hours, participation and wages of husband and wife. We discuss the problems of identification and statistical coherency that arise in the application of the collective household labour supply model. The model is estimated using a paneldata set of Dutch couples. The paneldata allow for the inclusion of random effects. The estimates allow us to check the underlying regularity conditions on individual preferences, and to obtain estimates of the sharing rule that governs the division of household income between husband and wife. We allow the sharing rule parameters to depend on marital status. 1We are greatly indebted to Statistics Netherlands for providing the data. We thank five anynomou