Intertemporal Preferences and Labor Supply

V Joseph Hotz, Finn Kydland and Guilherme L Sedlacek

Econometrica, 1988, vol. 56, issue 2, 335-60

Abstract: In this paper, the authors examine whether nonseparable preference structures ar e important in characterizing life-cycle labor supply. Using longitud inal data on prime-age males from the Panel Study of Income Dynamics, they estimate a model of life-cycle leisure and consumption under un certainty in which intertemporal preferences are allowed to be nonsep arable in leisure. The model tests several alternative specifications considered in the literature. They investigate the robustness of the ir findings to certain forms of population heterogeneity and types of model misspecification. Across alternative specifications, the autho rs find that the standard assumption of intertemporally separable pre ferences for leisure is not consistent with the data. Copyright 1988 by The Econometric Society.

Date: 1988
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