Heterogeneous Preferences, Spousal Interaction, and Couples’ Time-Use

  (joint with Monika Merz and Tamás K. Papp)

Abstract:

"We present a model of the time-allocation decision of spouses in order to study the role of heterogeneity in preferences and wages for couples’ labor supply. Spouses differ in their tastes for market consumption and non-market goods and activities, and also in their offered or earned wages. They interact in their choices of market hours, homework, and leisure. We estimate the model for married or cohabiting couples in the 2001/02 wave of the German Time-Use Survey using Bayesian techniques. We generate gender-specific own- and cross-wage elasticities of market hours in the cross-section. Elasticities are larger for females than males. They are smaller for single earners than spouses in dual-career couples. Modeling preference heterogeneity at the spousal level and spousal mutual insurance against adverse wage shocks matters for the size and distribution of wage-elasticities, and therefore for policy analysis."