Econometrica: Sep 2015, Volume 83, Issue 5

Sharing Rule Identification for General Collective Consumption Models

https://doi.org/10.3982/ECTA10839
p. 2001-2041

Laurens Cherchye, Bram De Rock, Arthur Lewbel, Frederic Vermeulen

We propose a method to set identify bounds on the sharing rule for a general collective household consumption model. Unlike the effects of distribution factors, the level of the sharing rule cannot be uniquely identified without strong assumptions on preferences across households. Our new results show that, though not point identified without these assumptions, strong bounds on the sharing rule can be obtained. We get these bounds by applying revealed preference restrictions implied by the collective model to the household's continuous aggregate demand functions. We obtain informative bounds even if nothing is known about whether each good is public, private, or assignable within the household, though having such information tightens the bounds. We apply our method to US PSID data, obtaining narrow bounds that yield useful conclusions regarding the effects of income and wages on intrahousehold resource sharing, and on the prevalence of individual (as opposed to household level) poverty.

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Supplement to "Sharing Rule Identification for General Collective Consumption Models"

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Supplement to "Sharing Rule Identification for General Collective Consumption Models"

This appendix provides information on the estimation of the QUAIDS demand systems used in the manuscript.

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