This paper discusses two of the problems found in earlier research on the labor-market activity of married women. First, the assumption of freely varying choices within the household's utility function results in biased estimates of the wife's labor-supply elasticity. Depending on the substitute-complement relationship of the spouses' nonmarket time, pooling rationed and unrationed households can lead to a downward biased own-wage elasticity (as in the case of substitutability). With substitutability between spouses' nonmarket time, the income effect is also downward biased. Second, in the absence of rationing, pooling households with part-time working heads and full-time working heads will lead to similar biases as in the case of rationing versus nonrationing. Hence, estimating the labor-market activity of married women, spouse present, requires the researcher to account for the labor-market activity of the husband. As in Heckman's paper (1976), estimating the labor-supply and market wage equations of married women using only a working subsample leads to biased coefficients. The estimates produced here confirm his findings.
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