Association for Public Policy Analysis & Management

This paper develops a theoretical model that incorporates psychological factors as an element to determine arrangements inside the household, and analyze their consequences for male labor decisions and possession of non-durable goods. To implement the theoretical model, I use a unique database that contains information about psychological variables for men and women. The psychological variables being analyzed are: resilience, self-esteem, self-control, motivation, social problem solving and stress. To avoid endogeneity problems, I use instrumental variables. I found that rational resolution of problems for men and the years of school for the women are important predictors for the men's labor supply. Furthermore, when using instrumental variables, the stress of men affects negatively the labor supply, while the resilience of women has a positive effect on men’s labor supply. In relation to durable goods, I analyze those related to entertainment and no entertainment. Self-control for men and women is an important predictor for the possession of durable goods related to entertainment. The non-cognitive factors of women (self- esteem, impulsive resolution of problems and stress) are important predictors for the possession of durable goods not related to entertainment.