Identifying Interdependent Behavior in an Empirical Model of Labor Supply

Thomas Aronsson (), Sören Blomquist and Hans Sacklén
Additional contact information
Thomas Aronsson: Department of Economics, Umeå University, Postal: 901 87 Umeå, Sweden
Hans Sacklén: Trade Union Institute for Economic Research, Postal: FIEF, Wallingatan 38, SE-111 24 Stockholm, Sweden

No 147, Working Paper Series from Trade Union Institute for Economic Research

Abstract: In this paper we test a particular form of interdependent behavior, namely the hypothesis that individuals´ choices of hours of work are influenced by the average hours of work in a social reference group. There are problems to empirically disentangle the effects of interdependent behavior and preference variation across groups. We show that panel data or data from several points in time are needed. In the empirical analysis we combine cross-section data from 1973, 1980 and 1990. Our results support the hypothesis of interdependent behavior. The implication is that conventional tax policy predictions, in which preference interdependencies are neglected, will tend to underestimate the effect of a tax reform on hours of work. Our point estimates suggest that conventional calculations would capture only about a third of the actual change in hours of work.

Keywords: Labor supply; interdependent preferences; nonlinear taxes (search for similar items in EconPapers)
JEL-codes: C51 H31 J22 (search for similar items in EconPapers)
Pages: 26 pages
Date: 1998-10-28
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

Published in Journal of Applied Econometrics, 1999, pages 607-626.

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http://swopec.hhs.se/fiefwp/papers/WP147.pdf (application/pdf)

Related works:
Journal Article: Identifying Interdependent Behaviour in an Empirical Model of Labour Supply (1999)
Working Paper: How to Identify Interdependence Behavior in an Empirical Model of Labor Supply (1992)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:fiefwp:0147

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