In the specifications with controls for husband and wife indicators, the own and cross-wage elasticities are generally similar in magnitude. This suggests that it may
be the difference in the log wages that matters rather than the absolute level of the wages. However, tests for the linear restriction that w
f
and w
h
can be replaced by w
f
− w
h
generally reject the restriction. For example, for the estimates in Table 2, Column 5, the hypothesis is rejected using a conventional test for linear restrictions
with a chi-square value of 21. The second panel in Table 2 contains results where the two methods to deal with
selection discussed in Section IV are implemented. Results are reported only for the specification with controls for husband and wife indicators. Reassuringly, the results
with the Heckman-type correction, and the truncation correction are very similar to each other and to the uncorrected results. This suggests that the estimated elasticities
are not suffering from severe selection biases.
15
Nonlabor income is generally found to have a negative but rarely statistically sig- nificant effect on hours.
16
Given the possible endogeneity of nonlabor income, it would be unwise to interpret this correlation as a causal effect. Excluding nonlabor
income from the specification has little impact on the estimated wage elasticities.
17
In unreported results, I have carried out the estimation using data grouped at the national level. At this level, there are 144 groups representing 12 husband types and
12 wife types. I find an own-wage elasticity for women of 1.25 0.10 and a cross- wage elasticity of
−0.44 0.08. These are unsurprisingly similar to the results in Table 2 without the controls for husband and wife types. The similarity suggests that migra-
tion across regions does not appreciably bias the estimates. Also, the estimates in Table 2 are robust to excluding nonnatives from the sample.
B. Hours Elasticities for Husbands
The hours elasticities for men are in Table 3. For men the estimates are quite similar across estimators and so I will concentrate on the G2SLS estimates. The own-wage
elasticity is found to be very small and statistically insignificant in both specifications. These small elasticities are typical of male wage elasticities in the literature and sug-
gest that married men do not adjust hours in line with small changes in wages.
18
The estimates for the cross-wage elasticity for men are positive for both specifications but
are very small and statistically insignificant in Columns 4–6 of Table 3. This approx- imately zero cross-wage elasticity is certainly more plausible than the positive
wife’s wage, the less responsive her hours are to her husband’s wage. The fact that the wife’s hours are par- ticularly high when both she and her husband have high wages is consistent with leisure complementarities
within the family. 15. When the wage elasticities are allowed to differ for families with and without children aged younger
than 18, I find statistically insignificant differences in the wage elasticities for these two groups. 16. Nonlabor income is composed of interest income, dividends, rental income, social security income, pub-
lic assistance, and retirement income. 17. The elasticity for other income is
−0.03 evaluated at the mean value of other income of 1,200. Imbens, Rubin, and Sacerdote 2001 calculate income elasticities using a sample of lottery winners. They
find income elasticities of approximately −0.20 for hours and −0.14 for participation.
18. When a quadratic model is estimated it is found that the own-wage elasticity is decreasing in the hus- band’s wage. This is consistent with evidence in the literature that labor supply elasticities are lower for high-
wage men than for low-wage men see Juhn and Murphy 1997.
The Journal of Human Resources 708
elasticity of about 0.25 in Column 2: Most models of labor supply suggest that the income effect of increases in wife’s wage do not have a positive effect on husband’s
hours. As for wives, greater nonlabor income is correlated with lower hours.
C. Specification Checks
