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Is big better? On scale and scope economies in the Portuguese water sector. mimeo.

C. Van Klaveren,  B. van Praag and H. Maassen van den Brink

Abstract

We estimate a collective time allocation model, where two-earner households behave as if the spouses maximize a household utility function, and where one-earner households, where only the man works, behave as if the spouses maximize a household utility function, conditional on the zero job-hour choice of the woman. We find that the  shape of the individual indifference curves are mainly influenced by leisure and the household income. For one-earner households, also household production is important and this is because there are relatively more children in these households. Differences between one-earner and two-earner households seem to reflect the difference in specialization behavior of the spouses. Women in one-earner households have more bargaining power than their  partner, and we find the opposite for two-earner households. The bargaining position in two-earner households is determined by the individual wages, while for one-earner households, it is determined by the wage rate of the  man, the number of children and age. Finally, we evaluate how one extra hour of female labor supply influences the household and the individual utility levels, assuming that the labor supply of women may be non-optimal for both one and two-earner households. An increase of the woman's labor hours would be a Pareto improvement for two-earner households. For one-earner households, we find that an extra hour of labor is beneficial for the  household and for the woman, but not for the man.

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