Married Women Labour Supply in Italy: an IV approach to estimation using time-use data

Empirical studies show that misspecification of the married women's labour supply equation may produce inefficiency in wage-elasticity estimation. In order to reduce the variability of these estimates, we suggest a new approach based on instrumental variables given by the economic value of the domestic unpaid work of the women. Using Italian micro-data on time use (ISTAT Survey on Time Use), and applying both a parametric and a semiparametric procedure, we estimate a stable “positive” relationship between individual wage and labour supply. Moreover, women labour supply is negatively influenced by the indirect cost of their informal activity of childcare and domestic work