Why are Married Men Working So Much? An Aggregate Analysis of Intra-Household Bargaining and Labour Supply

Are macro-economists mistaken in ignoring bargaining between spouses? This article argues that models of intra-household allocation could be useful for understanding aggregate labour supply trends in the U.S. since the 1970s. A simple calculation suggests that the standard model without bargaining predicts a 19% decline in married-male labour supply in response to the narrowing of the gender gap in wages since the 1970s. However married-men's paid labour remained stationary over the period from the mid 1970s to the recession of 2001. This article develops and calibrates to U.S. time-use survey data a model of marital bargaining in which time allocations are determined jointly with equilibrium marriage and divorce rates. The results suggest that bargaining effects raised married-men's labour supply by about 2.1 weekly hours over the period, and reduced that of married women by 2.7 hours. Bargaining therefore has a relatively small impact on aggregate labour supply, but is critical for trends in female labour supply. Also, the narrowing of the gender wage gap is found to account for a weekly 1.5 hour increase in aggregate labour supply. Copyright 2013, Oxford University Press.