Life Cycle Time Allocation and Saving in an Imperfect Capital Market

Arbeitspapier

This paper combines income and expenditure with time use data to provide a unique picture of the time paths of labour supplies, saving and full consumption for two-adult households over the life cycle. These data are used to test the life cycle model presented in the paper, at the core of which is the hypothesis that households face a borrowing interest rate that rises sharply with the amount of non collateral based borrowing. The household members jointly choose time paths of time use, consumption and saving over their life cycle in the face of this capital market imperfection. This model explains the data much better than does the alternative hypothesis of a perfect capital market. Finally, households are shown to differ significantly in their saving behaviour in a way that depends on secondary earner labour supply, with a strong positive association between saving and the secondary earner?s income.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 1036

Classification and Topics

• Classification: Wirtschaft ; Fiscal Policies and Behavior of Economic Agents: Household ; Household Production and Intrahousehold Allocation ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
• Subject: saving ; labour supply ; imperfect capital market ; lifecycle ; Lebensverlauf ; Arbeitsangebot ; Sparen ; Konsumtheorie ; Zeitallokation ; Finanzmarkt ; Unvollkommener Markt ; Schätzung ; Australien

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Apps, Patricia ; Rees, Ray
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/20271
• Last update: 10.03.2025, 11:44 AM CET