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Author: Cohen, Patrice Karr
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Cohen, Patrice Karr 
An Alternative Household Welfare Function: An Analysis of Labor Supply Behavior of Married Households Ph.D. Dissertation, University of North Carolina at Chapel Hill, 1983. DAIA 44/12, p. 3763, June 1984 Cohort(s): Mature Women Publisher: UMI  University Microfilms, Bell and Howell Information and Learning Keyword(s): Behavior; Collective Bargaining; Earnings; Marital Status; Slutsky Matrix; Wages In the dissertation, I develop a household utility function which attempts to capture the insights from the bargaining framework but at the same time is sufficiently simple that closed form solutions for demand equations can be derived. I hypothesize a StoneGeary utility function for the household in which the subsistence level commodities are interpreted as marriage existence levels of commodities. I then derive comparative statics and analyze the restrictions imposed by traditional household utility analyses. Like others who have worked with price dependent preferences, I find that the comparative statics, and restrictions on demand equations differ depending on the assumptions made about the relationship between prices in the utility function and prices in the budget constraint. I find that if prices in the utility function are the same as prices in the budget constraint, then symmetry of the Slutsky matrix does not hold. Some cross compensated price effects are equal, but others are not. After analyzing the theoretical implications of this utility function, I then estimate the demand equations derived from the theory. The system of equations I estimate is a linear expenditure system, similar to that usually derived from the StoneGeary utility function. The major difference is that the marriage existence levels are unique to each family, not constant as the subsistence levels usually are. Thus, before estimating the linear expenditure system, the marriage existence levels are estimated. These levels are interpreted as the amount of a commodity the individual would consume if he or she were divorced. In estimating these marriage existence commodities, some assumption must be made about the relationship between the price vector an individual faces when married, and the price vector an individual faces when divorced. I estimate the model under both of these assumptions with regard to women's wages. I find that there does seem to be a significant difference in the structure of wage compensation faced by married and divorced women. After estimating the marriage existence levels, I then estimate the system of earnings functions using the National Longitudinal Survey of Mature Women. In order to obtain an indication of the implications of my model, I also estimate a system of earnings functions derived from the linear expenditure system in which commodities are interpreted as subsistence level commodities, and are estimated as constants. The labor supply elasticities derived from these two different models are surprisingly similar. However, to get a better indication of the difference between the two specifications of the linear expenditure system, I use the estimates of both models, obtained with 1968 data, and calculate a predicted labor supply for 1972, using 1972 values for the variables. I find that the predictions of the models in which the barred terms are interpreted as marriage existence levels are closer to actual values than the predictions of the models in which the barred commodities are interpreted as subsistence levels. 

Bibliography Citation
Cohen, Patrice Karr. An Alternative Household Welfare Function: An Analysis of Labor Supply Behavior of Married Households. Ph.D. Dissertation, University of North Carolina at Chapel Hill, 1983. DAIA 44/12, p. 3763, June 1984. 