A researcher uses a regression analysis to estimate a labour supply equation for married females using data for married couples, a wife and a husband. The dependent variable is the log of the wife’s weekly hours of work. The independent variables are the log of the wife’s wage, the log of the husband’s wage and the log of the non-labour income of the household. The estimated coefficient for the husband’s wage in this equation was -0.9.
a. Interpret this estimated value in terms of the elasticities, etc. that appear in the demand for the wife’s consumption time in our analysis of labour supply based on the labourleisure model.
A second researcher repeats this analysis, but uses a sample of older married couples compared to the sample of the first researcher that was mainly younger married couples. In this analysis the estimated coefficient for the husband’s wage was -0.2.
b. How would you explain this difference using the labourleisure model?
