Collective Decisions, Household Production, And Labor Force Participation

In this paper, we generalize the collective model of household labor supply with domestic production to allow for the possibility of nonparticipation in the labor market. We also relax the marketability assumption according to which domestic goods and market goods are perfectly substitutable. Our results are twofold. First, we show that the main structural components of the decision process can be retrieved from observed behavior. Second, we estimate a system of market and domestic labor supply using the Panel Study of Income Dynamics and apply the theoretical results to recover the intra-household sharing of resources.