ERIC Number: ED105021
Record Type: RIE
Publication Date: 1973-Nov
Reference Count: 0
Family Decisionmaking Over the Life Cycle: Some Implications for Estimating the Effects of Income Maintenance Programs.
Smith, James P.
The standard one-period labor supply model that economists have used is in some ways an inadequate tool to evaluate a Family Assistance Plan (FAP). The principal difficulty is that an FAP will have important interperiod or life cycle effects. The pure life cycle model, an extension of the work of Becker and Ghez, is derived here without reference to its implications for an FAP. The timing of market participation is shown to depend upon the life cycle wage pattern of men and women, the rate of interest and the rate of time preference, and any age-related changes in the productivity of nonmarket uses of time. A comparison of the predictions of the pure life cycle and pure oneperiod models attempts to clarify circumstances under which the life cycle model should be used and those under which the single-period model is appropriate. The theoretical model is then used to predict and analyze the expected labor supply effects of an FAP. Finally, human capital investments are included in the model. The final section contains an empirical simulation of the predicted effects of an FAP on the hours behavior of men and women. These results suggest what the theory itself implied--a much larger effect of an FAP on the work behavior of married women than on the work behavior of male heads of households. (Author/JM)
Publication Type: Reports - Research
Education Level: N/A
Sponsor: Economic Development Administration (DOC), Washington, DC.; Office of Economic Opportunity, Washington, DC.
Authoring Institution: Rand Corp., Santa Monica, CA.