HOUSEHOLD LABOR SUPPLY IN URBAN AREAS OF BOLIVIA

We analyze labor supply behavior and the choice between formal and inf ormal sector work of the two spouses in families in urban areas of a d eveloping country, using cross-section data from Bolivia drawn in 1989 . The model generalizes the neoclassical family labor supply model. No nmonetary returns of formal sector employment capture the fact that th e choice between sectors is not exclusively based on wage differential s. Wage equations, nonmonetary returns equations, and labor supply equ ations are estimated jointly by smooth simulated maximum likelihood. W e find substantial cross-wage elasticities of working hours of both pa rtners, and large substitution elasticities between the two sectors.