Improving the Modelling of Couples' Labour Supply

Robert Breunig, Deborah Cobb-Clark, Xiaodong Gong

    Research output: Contribution to journalArticle

    Abstract

    We study work hours of Australian couples using a structural labour-supply model. We introduce model improvements which allow error in wage estimation and unobserved influences on partners'non-market time to be correlated with one another and with own wage. This more realistic model produces wage elasticities - 0.26 (men) and 0.50 (women) - twice as large as those found without these innovations. Australian Government changes to the tax and transfer system between 2004 and 2006 are predicted to have little impact on participation and labour supply. Average weekly family income is predicted to increase by $65 per week.
    Original languageEnglish
    Pages (from-to)466-485
    JournalEconomic Record
    Volume84
    Issue number267
    DOIs
    Publication statusPublished - 2008

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