Gender ratio, divorce rate, and intra-household collective decision process: evidence from iranian urban households labor supply with non-participation

This paper provides an empirical investigation on the individual labor supply of Iranian spouses in an intra-household collective decision framework in which gender ratio and divorce rate play a central role for resource allocation of household. The dataset is taken from the Households’ Expenditures Survey (2008) and the Annual Statistical Yearbook (2008) of Iran. I have conducted the parameters estimation and hypothesis testing using switching regression technique to catch the presence of the widespread non-participation of spouses across Iranian households. Reduced forms of labor supply are estimated considering the endogeneity of wage rates. The findings show that the unitary model of resource allocation and the collective model of decision process under Iranian civil procedure rules are strongly rejected, but the Pareto efficiency in the family resource allocation and validity of the specified model are confirmed. Furthermore, the coherency condition of labor supply reduced forms is satisfied. The structural labor supplies are derived from the reduced forms, and they indicate that leisure is a normal good for spouses. They also show the cross elasticity of a wife’s labor supply with respect to her husband’s wage is negative. The calculated marginal effect of non-labor income on the wife’s share is 0.76. The gender ratio and the divorce rate are both significant determinants of the sharing rule and the estimated coefficients of these variables are consistent with theoretical considerations. Copyright Springer-Verlag Berlin Heidelberg 2015