IZA DP No. 2909: Why Are Married Men Working So Much? Home Production, Household Bargaining and Per-Capita Hours
published in: Review of Economic Studies, 2013, 80 (3), 1055-1085
Empirical patterns of labor supply at the micro level tend to reject the unitary model assumption implicit in most macro theories, where households are the deemed to be rational agents. This paper examines the rise in per-capita labor since 1975 and asks how the inclusion of bargaining between spouses in a standard macro model would alter the analysis of recent trends in aggregate labor supply. The main findings are that the stationarity of married men’s work hours reflects weakening of men’s bargaining position as women’s wages rose, and that the unitary model seriously overstates the response of aggregate labor to trends in relative wages.