Collective labour supply with children

We extend the collective model of household behavior to allow for the existence of public consumption. We show how this model allows to analyze welfare consequences of policies aimed at changing the distribution of power within the household. In particular, we claim that our setting provides an adequate conceptual framework for addressing issues linked to the ’targetting’ of specific benefits or taxes. We also show that the observation of the labor supplies and the household demand for the public good allow to identify individual welfare and the decision process. This requires either a separability assumption, or the presence of a distribution factor

Testable implications of general equilibrium theory: A differentiable approach

Is general equilibrium theory empirically testable? Our perspective on this question differs from the standard, Sonnenschein-Debreu-Mantel (SDM) viewpoint. While SDM tradition considers aggregate (excess) demand as a function of prices, we assume that what is observable is the equilibrium price vector as a function of the fundamentals of the economy. We apply this perspective to an exchange economy where equilibrium prices and individual endowments are observable. We derive necessary and sufficient conditions that characterize the equilibrium prices, as functions of initial endowments. Furthermore, we show that, if these conditions are satisfied, then the economy can generically be identified. Finally, we show that when only aggregate data are available, observable restrictions vanish. We conclude that the availability of individual data is essential for the derivation of testable consequences of the general equilibrium construct

Changes in Assortative Matching and Inequality in Income: Evidence for the UK

The extent to which like‐with‐like marry is important for inequality as well as for the outcomes of children who result from the union. In this paper, we present evidence on changes in assortative mating and its implications for household inequality in the UK. Our approach contrasts with others in the literature in that it is consistent with an underlying model of the marriage market. We argue that a key advantage of this approach is that it creates a direct connection between changes in assortativeness in marriage and changes in the value of marriage for the various possible matches by education group. Our empirical results do not show a clear direction of change in assortativeness in the UK between the birth cohorts of 1945–54 and 1965–74. We find that changes in assortativeness pushed income inequality up slightly, but that the strong changes in education attainment across the two cohorts contributed to scale down inequality

A note on separability and intra-household resource allocation in a collective household model

Published in Review of Economics of the Household https://doi.org/10.1007/s11150-012-9155-8</p

Household Labor Supply and Home Services in a General-Equilibrium Model with Heterogeneous Agents

We propose a new explanation for differences and changes in labor supply by gender and marital status, and in particular for the increase in married women's labor supply over time. We argue that this increase as well as the relative constancy of other groups' hours are optimal reactions to outsourcing labor in home production becoming more attractive to households over time. To investigate this hypothesis, we incorporate heterogeneous agents into a household model of labor supply and allow agents to trade home labor. This model can generate the observed patterns in US labor supply by gender and marital status as a reaction to declining frictions on the market for home services. We provide an accounting exercise to highlight the role of alternative explanations for the rise in hours in a model where home labor is tradable

Performance pay and assortative matching

Peer reviewedPostprin

Leading-effect vs. Risk-taking in Dynamic Tournaments: Evidence from a Real-life Randomized Experiment

Two 'order effects' may emerge in dynamic tournaments with information feedback. First, participants adjust effort across stages, which could advantage the leading participant who faces a larger 'effective prize' after an initial victory (leading-effect). Second, participants lagging behind may increase risk at the final stage as they have 'nothing to lose' (risk-taking). We use a randomized natural experiment in professional two-game soccer tournaments where the treatment (order of a stage-specific advantage) and team characteristics, e.g. ability, are independent. We develop an identification strategy to test for leading-effects controlling for risk-taking. We find no evidence of leading-effects and negligible risk-taking effects