TESTING NEOCLASSICAL AND NONNEOCLASSICAL MODELS OF HOUSEHOLD LABOR SUPPLY

Four models of household labour supply are discussed: (1) the neoclassical model; (2) the wife as a secondary earner model; (3) the intra-household trade model; and (4) the Nash bargaining model. The first three models are tested using data from the 1986 Australian Income Distribution Survey. The study found that none of these three models satisfied their necessary conditions. The results imply that past studies of labour supply may have imposed too restrictive assumptions. The true model is probably more complicated than what has usually been assumed.