Improving the Modelling of Couples Labour Supply

20 Pages Posted: 10 Dec 2008

See all articles by Robert V. Breunig

Robert V. Breunig

Australian National University (ANU) - Crawford School of Public Policy

Deborah A. Cobb-Clark

School of Economics, University of Sydney; IZA Institute of Labor Economics

Xiaodong Gong

Australian National University (ANU) - School of Economics; IZA Institute of Labor Economics

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.

JEL Classification: H24

Suggested Citation

Breunig, Robert V. and Cobb-Clark, Deborah A. and Gong, Xiaodong, Improving the Modelling of Couples Labour Supply. Economic Record, Vol. 84, No. 267, pp. 466-485, December 2008. Available at SSRN: https://ssrn.com/abstract=1311548 or http://dx.doi.org/10.1111/j.1475-4932.2008.00511.x

Robert V. Breunig (Contact Author)

Australian National University (ANU) - Crawford School of Public Policy ( email )

7 Liversidge Street
Lennox Crossing
Canberra, ACT 0200
Australia
61261252148 (Phone)

HOME PAGE: http://https://crawford.anu.edu.au/crawford_people/content/staff/rbreunig.php

Deborah A. Cobb-Clark

School of Economics, University of Sydney ( email )

606 Social Sciences Bldg. (A02)
The University of Sydney
Sydney, NSW 2006
Australia
61435061387 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Xiaodong Gong

Australian National University (ANU) - School of Economics ( email )

Coombs Building 9
Canberra, Australian Capital Territory 0200
Australia
61 2 6125 4235 (Phone)
61 2 6125 0182 (Fax)

HOME PAGE: http://econrsss.anu.edu.au/Staff/gong/contact_xg.htm

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany
049 228/ 3894 527 (Phone)
049 228/ 3894 510 (Fax)

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