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Life-cycle labour supply with human capital: Evidence for Spain

Author

Listed:
  • Antonio Cutanda

    (Universidad de Valencia, Valencia, Spain ORCID number: 0000-0003-2066-4632)

  • Juan A. Sanchis Llopis

    (Universidad de Valencia and ERICES, Valencia, Spain ORCID number: 0000-0001-9664-4668)

Abstract

In this paper we provide the first estimate of the intertemporal substitution for leisure in Spain, accounting for the impact of human capital accumulation. This would allow uncovering whether the intertemporal labour supply of Spanish workers is affected by human capital. Our empirical strategy consists of estimating the equation for the intertemporal substitution of leisure with and without accounting for human capital, what allows to detect hypothetical estimation biases associated to omitting the impact of human capital. To that end, we build a pseudo-panel data set combining the Spanish Family Expenditure Survey and the Labour Survey over the period 1987-1997. While the model that ignores human capital accumulation provides an estimate of the intertemporal elasticity of substitution for leisure about 0.25, comparable to previously available estimates for Spain and other economies, the model with human capital provides an estimate about 0.5, what confirms the existence of a bias in the former estimates. Finally, this bias is larger for the younger cohorts than for the older ones.

Suggested Citation

  • Antonio Cutanda & Juan A. Sanchis Llopis, 2022. "Life-cycle labour supply with human capital: Evidence for Spain," Working Papers 2204, Department of Applied Economics II, Universidad de Valencia.
    • Handle: RePEc:eec:wpaper:2204
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    More about this item

    Keywords

    Euler equation; Instrumental variables; Intertemporal Substitution for leisure; Panel data;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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