Conference Paper Max Weber Fellows June Conference 2010, held 15-16 June 2010, Villa la Fonte, San Domenico di Fiesole, Italy
Living arrangements, consumption smoothing, and labor supply
15 Jun 2010
This paper studies how the labor supply behavior of individuals depends on their living arrangement, namely, whether they are single, cohabiting, or married. I am motivated by the great amount of empirical evidence pointing out the importance of family structure for female labor supply, and the growing number of cohabiting couples. I first provide evidence on the labor supply of single, cohabiting, and married individuals using the British Household Panel Survey (BHPS). I then propose a model to explain the documented labor supply patterns, focusing on how insurance possibilities within the household may affect labor supply. In particular, if there is less intra-household insurance, that is, consumption shares depend more on the income shares of partners, incentives are expected to be provided to work more.