Testing the sharing rule in a collective model of discrete labor supply with Spanish data

Abstract

ABSTRACTThis paper estimates a collective model of discrete labor supply, using data from the Spanish Survey of Household Finances. The model allows identifying a sharing rule of household income. Then, it is used unique information for unemployed wives about intrahousehold transfers to estimate its accuracy. Results show that husbands’ hours of work are conditional on wives’ decisions, which mainly depend on non-labour income. Despite data availability, predicted sharing rules fit the data qualitatively well, and are mainly driven by wives’ potential income. Husbands show low levels of altruism, and non-participation appears to be especially detrimental for wives with high potential income.