This thesis analyzes intra-household behavior and consequences in quantitative models of the family. The focus is (i) the estimation of Frisch labor-supply elasticities in couple households and (ii) inefficiencies arising from limited commitment between spouses. Chapter I gives a brief overview of different model types of intra-household behavior and an overview of the thesis. Chapter II (joint work with Christian Bredemeier and Falko Jüßen) deals with the biases in conventional estimates of Frisch labor-supply elasticities in presence of borrowing constraints. The chapter develops an incomplete-markets model with two-earner households and derives a new estimation approach for the Frisch elasticity that yields unbiased estimates even in samples that include borrowing-constrained households. The approach takes the form of a simple interaction-term model with minimum data requirements. Chapter III uses an incomplete-markets model to quantify how strongly limited commitment reduces individuals' possibilities to share risk within the household. Additionally, households are identified for whom intra-household risk sharing is particularly aggravated by limited commitment. The results imply an additional demand for other forms of insurance such as public insurance and provide a rationale for means-testing that targets individuals rather than households. Chapter IV (joint work with Christian Bredemeier and Falko Jüßen) investigates how Frisch labor-supply elasticities can be estimated when commitment between spouses is limited. The chapter shows that proxying individual consumption, which theory calls for as a control variable but which is unavailable in most data sets, by household consumption causes substantial biases in estimated Frisch elasticities. Improved estimation approaches are developed which reduce or fully eliminate this bias. Chapter V (joint work with Christian Bredemeier and Falko Jüßen) introduces limited commitment into a quantitative dual-earner heterogeneous-agents incomplete-markets economy and uses this framework to study the inefficiencies in savings and risk-sharing behavior due to limited commitment. Chapter VI summarizes the main results of the thesis.
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