Volume 29, Number 4 (Fall) 1994
Newman, John L., and Paul J. Gertler. 1994. "Family Productivity, Labor Supply, and Welfare in a Low-lncome Country." Journal of Human Resources 29(4): 989-1026.
This paper develops an analytical approach to estimating family labor supply and consumption decisions appropriate for developing countries. The model identifies structural relationships allowing analysis of the welfare implications of intrahousehold allocation decisions, especially across generations. The approach allows for an arbitrary number of family members, each of whom may or may not engage in multiple activities. We identify the marginal returns to work in self-employment without directly observing the marginal returns or estimating the enterprise's production function. The key feature of the approach is to work with underlying structural marginal return and marginal rate of substitution functions together with first order Kuhn-Tucker conditions. We use this model to analyze family consumption and labor supply decisions of rural landholding households in Peru.
John Newman is a senior economist with the World Bank and Paul Gertler is a senior economist with RAND and a coeditor of the Journal of Human Resources. This paper has benefited from comments by Arie Kapteyn, Mark Rosenzweig, Jacques van der Gaag, and John Strauss and from excellent research assistance by Masako Ii and Menno Pradhan. Paul Gertler gratefully acknowledges financial support from the NICHD Grant No. P-50-12639. The data used in this article can be obtained from June 1995 through June 1998 from John Newman, The World Bank, 1818 H Street, NW, Washington, D.C. 20433.
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US ISSN 0022-166X