Labor supply estimation with collective models: an application to Brazil

Abstract

This paper aims to investigate the Brazilian spouses’ labor supply behavior and to check empirically the adequacy of a specific collective model. This approach provides a theoretical framework to interpret the intra-household decision process and for such uses variables called distribution factors. These variables when favorable to women, increases the wives’ bargaining power within families, reducing the labor supply. The distribution factors used in this paper are the age differential between husbands and wives and the sex-ratio–defined as the ratio between the total of men with the husband’s characteristics and the corresponding total of men and women in some region. The greater the age difference between man and women, the better the outside options of women and hence, hers bargaining power. The results show that a one-year increase in age gap reduces the women’s monthly labor supply in 0.13 hours and extends the men’s in 0.089 hours. Besides that, a 1 percentage point increase in the sex-ratio raises about seven hours the husbands’ monthly labor supply. Moreover, the spouses’ labor supply behavior does not refute the theoretical model in its more general specification.