An Informal Empirical Analysis of Labour Supply Decisions in the UK
This chapter analyses household data to see whether the number of hours worked per week by groups of individuals is consistent with the underlying budget constraint. The data used to test our hypothesis were taken from the 1978 and 1981 Family Expenditure Surveys (FES) each of which examined roughly 7,000 households. The chapter analyses the distributions of male hours of work from the 1978 and 1981 FES data sets. To summarize the analysis of hours distributions by family type, it would be fair to conclude that both the 1978 and 1981 FES data gave at best slight evidence that the choice set effect offsets the income effect and that the unemployment rate increases with family size as predicted by the budget constraints. Comparison of categories within a given year control for at least some of the outside factors and thus can be used to deduce the presence or otherwise of budget constraint effects on labour supply behaviour.