SHADOW PRICES 681 where W* is the shadow price, h is the hours of work, or alternatively, the amount of time the wife does not have available for her nonmarket activities, Wm is the wage of the husband, P is a vector of goods prices, A is the asset income of the household, and Z is a vector of constraints which arise from previous economic choices or chance events, such as the number of children, the education of the family members, and the state of household technology. W* is the value the household places on marginal units of the wife's time in production and con-sumption.

The formal derivation of this function is relegated to Appendix 1. There we establish that if the ordinary labor supply function is a positive monotonic function of wave rates, equation (1) may be derived in a straightforward fashion, with the range of that function constituting the domain of the marginal valuation function. We further establish …