A simultaneous equation model of spousal time allocation

Abstract

Given the complexity of spousal arrangements regarding market work and housework that have emerged during the last decade, time allocation by an individual within a family unit can no longer be treated as independent; albeit joint spousal decision making has not been properly modeled in the time-allocation literature. Accordingly, we develop a theoretical model which explains optimal time allocation of a typical dual-earner household which accounts for both interindividual and interactivity simultaneity. The model is estimated using a full information maximum likelihood technique with data from the 1983 wave of the Panel Study of Income Dynamics. While this study improves on prior work in the area of time allocation by taking interdependency and interactivity simultaneity into account, many of the findings are consistent with those of previous studies where allocation decisions have been assumed to be independent. Modeling spousal decisions jointly and correctly, however, should serve to narrow the gap between theory and actual time-allocation behavior.