A participation model with non-convex budget sets: the case of the wives of the unemployed in Great Britain

In this paper we estimate a participation model for the wives of the unemployed in Great Britain. The aim is to bring new evidence about the importance of the disincentive effect caused by the Benefit System, in particular, by Supplementary Benefit, in explaning the low probability of participation associated with the wives of the unemployed. The participation model takes into account the non convexities of the budget set which are due to the characteristics of Supplementary Benefit. The utility function is assumed to be of the CES type.