Income and substitution effects in family labour supply

Summary In this article, the results are presented of the estimation of a variant of Leuthold's model of labour supply of married couples in the Netherlands. Both in the case of husbands and in the case of wives the labour supply curve proves to be forward bending. The income effects are negative, but significantly different from zero only in the case of wives. The theorem that the substitution effect is positive is confirmed by the empirical results obtained. The labour supply of wives proves to be more sensitive to wage rate and income changes than the labour supply of wives proves to be more sensitive to wage rate and income changes than the labour supply of husbands. A comparison is made between the results obtained here and those mentioned in studies for the United States. The article is closed with an overview of some policy implications. During the period the author contributed to this article he was at the Economic Institute, State University of Utrecht; The authors wish to thank Dr. C. de Galan, Professor J.M.M. Ritzen, Dr. J.J.M. Theeuwes and Professor F.A.A.M. van Winden for their comments on an earlier draft of this article. Unless when stated otherwise, the data are obtained from theAanvullend Voorzieningengebruik Onderzoek 1979, a national survey carried out by the Social and Cultural Planning Bureau. The authors are indebted to this bureau for providing the data. It should be noted that some of these data (e.g. the yearly wage incomes) are based on computational adaptions of the original figures.