We examine household labor supply decisions in Argentina, Brazil, Paraguay, and Uruguay. After presenting a discrete joint-choice model, we assume and estimate a quadratic utility function. We use the estimated parameters to compute the elasticities of labor supply with respect to non-labor income. We also simulate a common welfare policy inspired on the "Plan jefe de hogar" launched in Argentina. Among the main results, we find returns to education between 6.6 and 10.7 percent for married women, and a varied impact of higher non-labor income on labor supply decisions. This diversity reflects these countries' heterogeneity regarding the polar-ization of socioeconomic and working conditions. The implementation of a "Plan común jefe de hogar" confirms the diversity of responses and generates a significant improvement in social cohesion within Mercosur's countries.
|Publication status||Published - 1 Jan 2011|