A SYMMETRICAL APPROACH TO THE LABOR-MARKET WITH THE HOUSEHOLD AS THE UNIT OF OBSERVATION

In this paper a model for the labour market is developed which extends the traditional microeconomic studies of the labour market in two way s. First, the household is taken as the unit of observation and is con sidered to be the (potential) supplier of the labour of both husband a nd wife. The labour supply of the spouses is assumed to be jointly det ermined by characteristics of the household as well as individual char acteristics. Second, following an earlier paper (Van Praag et al. (199 1), where the female labour market is analysed separately, both the su pply behaviour of the spouses and the labour demand behaviour of the e mployers is modelled. We apply an algorithm which needs only a few sim ulations per observation, while the simulation procedure generates dra wings from the eight-dimensional intervals in an efficient way. Empiri cal results are presented for a sample of Dutch households in 1983. Wi th the model the impact of policy measures on employment can be evalua ted. It follows that a substantial part of participation can be attrib uted to the 'insider-advantage' for employed individuals. Further it a ppears that the labour market for women is more sensitive to changes i n the socio-economic environment than the labour market for men.