Collective Models of Labor Supply with Nonconvex Budget Sets and Nonparticipation: A Calibration Approach

We suggest a methodology to calibrate a collective model with household-specific bargaining rules and marriage-specific preferences that incorporate leisure externalities. The empirical identification relies on the assumption that some aspects of individual preferences remain the same after marriage, so that estimation on single individuals can be used. The procedure maps the complete Pareto frontier of each household in the dataset and we define alternative measures of a power index. The latter is then regressed on relevant bargaining factors, including a set of variables retracing the potential relative contributions of the spouses to household disposable income. In its capacity to handle complex budget sets and labor force participation decisions of both spouses, this framework allows the comparison of unitary and collective predictions of labor supply reactions and welfare changes entailed by fiscal reforms in a realistic setting (see Michal Myck et al., 2006; Denis Beninger et al., 2006).

Does the Representation of Household Behavior Matter for Welfare Analysis of Tax-benefit Policies? An Introduction

A widely shared intuition holds that individual control over money matters for the decision process within the household and the subsequent distribution of resources and welfare. As a consequence, there are good reasons to depart from the unitary model of the household and to explore the possibilities offered by models of the family accounting for several decision makers in the household and for the potential impact of tax reforms on the balance of power. This paper summarizes both the methodological and empirical findings presented in the next three papers of this special issue of the Review of the Economics of the Household. This series of contributions primarily entails a concrete comparison of the policy implications of the choice between the unitary and a particular multi-person representation: the collective representation. On the one hand, it suggests a methodology to implement the collective model of labor supply in a realistic context where participation is modeled together with working hours, and where the full tax-benefit system is accounted for. On the other hand, the empirical part relies on comprehensive simulations of tax reforms in Belgium, France, Germany, Italy, Spain, and the United Kingdom, and allows to quantify the distortions that may affect policy recommendations based on the unitary model.

Collective and Unitary Models: A Clarification

In this note we identify and clarify a confusion that has arisen in the literature about the exact relationship between unitary and collective models and what enters the Pareto weight and the sharing function. We suggest that we should denote as ‘unitary’ any model that leads to outcomes that satisfy the Slutsky conditions whether or not these outcomes depend on distribution factors. In particular, income pooling is neither necessary nor sufficient for a unitary model. We also show that the presence of prices or total expenditure in the sharing rule cannot be used as a test for a unitary model.

The labor supply of married women and spousal tax deductions in Japan—a structural estimation

The Japanese tax system offers an opportunity to investigate the labor supply response of married women to the income tax and the intrahousehold resource allocation mechanism, since the deductible amount from the husband’s income decreases as the wife’s earnings increase. Using cross-section data, I structurally estimate the labor supply of married women under the piece-wise linear budget constraint created by the Japanese tax and social security system. I find that the wife’s labor supply response to her husband’s decreasing deduction tends to be greater than the response to her own income tax. This suggests that not only the unitary model is rejected but also that female labor is allocated inefficiently within a family. Finally, this study shows that the choice of household model affects the predicted effect of policy reform and that the currently proposed reforms will have less of an effect on the labor supply of married women than previous studies claim.

The Working Families’ Tax Credit and Some European Tax Reforms in A Collective Setting

A framework for simplified implementation of the collective model of labor supply decisions is presented in the context of fiscal reforms in the UK. Through its collective form the model accounts for the well known problem of distribution between wallet and purse, a broadly debated issue which has so far been impossible to model due to the limitations of the unitary model of household behavior. A calibrated data set is used to model the effects of introducing two forms of the Working Families’ Tax Credit. We also summarize results of estimations and calibrations obtained using the same methodology on data from five other European countries. The results underline the importance of taking account of the intrahousehold decision process and suggest that who receives government transfers does matter from the point of view of labor supply and welfare of household members. They also highlight the need for more research into models of household behavior.

The Changing Role of the Labour Market within the EMU: the Case of Slovenia

The paper conceptualizes changes in the labour market and suggests labour market policies/reforms after Slovenia has joined the European Monetary Union. The loss of monetary sovereignty implies that in case of an external shock the labour market is burdened by a large amount of the adjustment process. But to increase flexibility of the labour market requires politically unpopular reforms. At the moment, Slovenia is faced with high inflation and a rigid labour market, which is also a key element of its low competitiveness. The reforms were halted under the pressure of their unpopularity. The paper, although concentrating on Slovenia, has general implications since the experiences of the newcomer to EMU are significant for other transition economies which are expected to follow the same path.

A public good version of the collective household model: an empirical approach with an application to British household data

In this paper we consider an empirical collective household model of time allocation for two-earner households. The novelty of this paper is that we estimate a version of the collective household model, where the internally produced goods and externally purchased goods are assumed to be public. The empirical results suggest that (1) Preferences of men and women differ; (2) Although there are significant individual variations, on average the utility functions of men and women are equally weighted in the household utility function; (3) Differences in the ratio of the partners’ hourly wages are explanatory for how individual utilities are weighted in the household utility function. (4) The female’s preference for household production is influenced by family size, but this does not hold for the male; (5) Both the male and the female have a backward-bending labor supply curve; (6) Labor-supply curves are forward-bending with respect to the partner’s wage rate; (7) Our model rejects the unitary Slutsky symmetry condition.

How Wage Compression Affects Job Turnover

I use Swedish establishment-level panel data to test the hypothesis of Bertola and Rogerson (Eur Econ Rev 41:1147–1171 1997) of a positive relation between the degree of wage compression and job reallocation. Results indicate that the effect of wage compression on job turnover is positive and significant in the manufacturing sector. The wage compression effect is stronger on job destruction than on job creation, consistent with downward wage rigidity. Further results include a strong positive relationship between the fraction of temporary employees and job turnover and a negative relationship between the amount of working-time flexibility and job reallocation.

Constructing Gay and Lesbian Parent Families “Beyond the Closet”

This paper provides a multilayered analysis of how lesbian mothers and gay fathers construct their families in a social context that has been described by Steven Seidman (2004) as “beyond the closet.” We stress how our participants’ family-building experiences are comparable to other non-biologically related families, but distinct due to heterosexual dominance. Using in-depth qualitative interviews with 18 lesbian birth mothers and 22 gay fathers, the authors discuss how participants navigate heterosexual dominance in institutions and in personal interactions.

The Chinese Banking System: Economic Performance and Prospects for Future Development

This paper examines the main characteristics of the Chinese banking industry. In particular, it analyses the main performance indicators of the system together with some prospects of future development. The paper also considers the problems related to high levels of non-performing loans and the internationalization paths of the Chinese banking market. In spite of some recent reforms, further legislative improvements are required to develop the system and to allow a gradual opening to foreign competition.

Different Paths to Similar Outcomes? Industrial Relations Reform and Public Policy in Australia and New Zealand

In recent years, both Australia and New Zealand have embarked on significant labor market reforms which have resulted in more decentralized and individualized systems of industrial relations. Although both countries share a common heritage of state-sponsored conciliation and arbitration, which fostered a centralized approach to labor market regulation, each has responded in its own way to economic and political pressures to reform its long-established industrial relations system. Despite differences in the process of indusrial relations reform, both countries now have industrial relations systems which are more individualistic and in which unions play a less significant role than in the past.

Government Intervention in Public Sector Industrial Relations: Lessons from the Alberta Teachers’ Association

In the public sector, Canadian governments intervene frequently in labor disputes by suspending collective bargaining and curtailing legal strikes. Previous research has focused on the contours of government intervention, such as its overall effects on collective bargaining and strikes. The discussion highlights one actor, a government, restricting the behavior of another actor, a union, using legislation and policy making. As a result, we know less about more micro-level elements and implications of the process of government intervention. I address these themes using a detailed case study of the Alberta Teachers’ Association and the strikes it coordinated in 2002.

The scoring rules in an endogenous election

Plurality rule is mostly criticized from being capable of choosing an alternative considered as worst by a strict majority. This paper considers elections in which the agenda consists of potential candidates strategically choosing whether or not to enter the election. In this context, we examine the ability of scoring rules to fulfil the Condorcet criterion. We show for the case of three potential candidates that Plurality rule is the only scoring rule that satisfies a version of the Condorcet criterion in two cases: 1) when preferences are single-peaked and, 2) when preferences are single-dipped.

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Poverty and its persistence: a comparison of natives and immigrants in Sweden

This paper analyzes poverty and its persistence in Sweden using a large panel with detailed income information obtained from tax registers. As opposed to many commonly used household panels, the features of the data utilized in this paper allow us to study native-immigrant differences in poverty. We use a hazard rate model based on multiple spells that accounts for unobserved heterogeneity and endogenous initial conditions. The empirical results suggest that there is negative duration dependence in both exit and entry hazard rates. Moreover, the transition rates are significantly affected by immigrant status, educational attainment, labor market conditions, age, and family status.

The Structure of the Chinese Banking System and Credit Access Problems for SMEs

This paper examines the structure and the main characteristics of the Chinese banking industry. In particular, the paper analyses the problematic aspects of credit relations of small and medium enterprises (SMEs). The SMEs are facing several problems in accessing the bank loans market, dominated by the political and contractual weight of state-owned enterprises. However, some recent reforms have improved the situation, a fundamental condition for additional positive results. Nevertheless, further and more pervasive modernization efforts are needed to consolidate these results and to develop the relationships between banks and SMEs.

Individual Needs Versus Collective Interests: Network Dynamics in the Freelance Editorial Association

The Freelance Editorial Association, founded in the 1980s, was an organization of editorial professionals working on contract. Through its 15 years of operation, the organization developed a model of collective representation and sought to improve employment practices and work relations for these contingent workers. Expanding through occupational networks, the association established a program of services and a set of principles for advocacy, which it applied on behalf of members seeking resolution of disputes with clients. The organization, however, proved unsustainable. Resource constraints, labor market structures, and the underlying dynamics of occupational networks, which operated in the interests of clients as well as freelancers, undermined its model. Although the association addressed many individual needs, it generated little leverage toward promoting collective interests. Its efforts, however, offer caveats for the development of new models of collective representation.

Do Reservation Wages Really Decline? Some International Evidence on the Determinants of Reservation Wages

Using cross-country data, we investigate the determinants of reservation wages and their course over the jobless spell. Higher unemployment benefits lead to higher reservation wages. Further, again consistent with the basic search model, repeated observations on the same individual provide scant evidence of declining reservation wages.

The Feeble Strength of One? Interdependence, Strategic Interaction, and the Decentralization of Collective Bargaining

This paper contributes to research examining class formation processes among capitalists by analyzing the fracturing of multiemployer collective bargaining associations in the U.S. coal mining and steel industries. The paper evaluates three theories of bargaining decentralization and offers an alternative account. Analyzing both the earlier stability of multiemployer bargaining and its subsequent decline, the paper attributes decentralization to changes in relationships of interdependence and power among unionized firms. While broad processes of economic restructuring gave rise to these shifts, social processes involving conflict and negotiation determined the specific direction of institutional change.

Religion and Trends in Euthanasia Attitudes among U.S. Adults, 1977–2004

Though many studies address the role of religion in predicting social attitudes over time, none has examined this relationship specifically for euthanasia. Using a large, nationally representative data source, this study seeks to address this void. Our findings indicate that considerable differences exist among religious denominations regarding the legalization of euthanasia. Specifically, we note a liberalizing trend for all included denominations. We also demonstrate substantial differences in the rates of liberalization, particularly in comparison to conservative Protestants. We conclude with an assessment of our findings relative to previous studies on religion and public opinion.

Cutting Porter’s Last Diamond: Competitive and Comparative (Dis)advantages in the Dutch Flower Cluster

The Dutch are the world’s leaders in the flower business even though they seem to lack comparative advantage in the traditional sense. Comparative advantages played a role in the history of the Dutch flower cluster and they still have a role today. Based on a critic of Porter’s theories, the investigation suggests that the exploitation of comparative advantages is allowed only to those firms and clusters that already possess a competitive advantage, based on technology, logistics infrastructure, innovation and human skills. So that comparative advantages and competitive advantages join in a sort of helix process based on social innovation and collective learning.