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Labor Supply and Taxation$
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Richard Blundell, Andreas Peichl, and Klaus F. Zimmermann

Print publication date: 2016

Print ISBN-13: 9780198749806

Published to Oxford Scholarship Online: June 2016

DOI: 10.1093/acprof:oso/9780198749806.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 24 October 2021

Modelling the Joint Determination of Household Labor Supplies and Commodity Demands

Modelling the Joint Determination of Household Labor Supplies and Commodity Demands

(p.68) (p.69) 3 Modelling the Joint Determination of Household Labor Supplies and Commodity Demands
Labor Supply and Taxation

Richard Blundell

Ian Walker

Oxford University Press

This chapter analyses the interactions between household decisions over labour supplies and commodity demands in a utility maximizing framework. These decisions have been modelled under the assumptions that either male labour supply is freely chosen or the observed male hours of work are exogenously determined so effectively imposing a ration on the household. The chapter demonstrates the importance of the separability assumption in the framework and tests the restrictions implied by separability using data from the UK Family Expenditure Survey. The survey presents not only earnings and hours data but also collects information on commodity expenditures. Research shows that there is an evidence of strong household composition on female labour supply entering both through necessary female leisure time and through necessary commodity expenditures. These effects would typically result in higher levels of participation for females with older children compared to with a household with no children.

Keywords:   household decisions, labour supplies, commodity demands, utility maximizing, male labour supply, female labour supply, earnings, UK Family Expenditure Survey, separability, leisure

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