Econometrica · 1991 · 530 citations · 13 references
Social SciencesEconomicsHousehold DemographyLabor EconomicsLabor Market AnalysisConsumer Demand AnalysisDemand AnalysisDemand TheoryHousehold ConsumptionHousehold EconomicsWorking HoursEndogeneity CorrectionEndogeneity SpecificationHousehold Demand SystemsHousehold Production ModelsLabor Supply AnalysisLabor Supply DecisionsLabor Supply ElasticityLabour Supply Effects
We examine the effects of male and female labor supply on household demands and present a simple and robust test for the separability of commodity demands from labor supply. Using data on individual households from six years of the UK FES we estimate a demand system for seven goods which includes hours and participation dummies as conditioning variables. Allowance is made for the possible endogeneity of these conditioning labor supply variables. We find that separability is rejected. Furthermore, we present evidence that ignoring the effects of labor supply leads to bias in the parameter estimates.
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Specification Tests in Econometrics
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