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Nonparametric Testable Restrictions of Household Behavior

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  • Susan K. Snyder
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    Abstract

    This paper uses semialgebraic theory to derive nonparametric testable restrictions of Pareto-efficient bargaining behavior within a household. These tests are analogous in form to Samuelson’s Weak Axiom of Revealed Preference (WARP) and are defined over data on household-level consumption and individual labor supplies. Thus, without observing intrahousehold division of consumption, we can nonparametrically test whether there exist nonsatiated utility functions such that household behavior is Pareto efficient. I apply these tests to data from the National Longitudinal Surveys on U.S. households and find that preferences exist that are consistent with Pareto efficiency for each household in the data set.

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    Bibliographic Info

    Article provided by Southern Economic Association in its journal Southern Economic Journal.

    Volume (Year): 67 (2000)
    Issue (Month): 1 (July)
    Pages: 171-185

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    Handle: RePEc:sej:ancoec:v:67:1:y:2000:p:171-185

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    Web page: http://www.southerneconomic.org/
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    Cited by:
    1. Cherchye, L.J.H. & Vermeulen, F.M.P., 2006. "Nonparametric Analysis of Household Labor Supply: Goodness-of-Fit and Power of the Unitary and the Collective Model," Discussion Paper 2006-13, Tilburg University, Center for Economic Research.
    2. Cherchye, L.J.H. & Rock, B. de & Vermeulen, F.M.P., 2009. "Opening the black box of intra-household decision-making: Theory and non-parametric empirical tests of general collective consumption models," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3607141, Tilburg University.
    3. Cherchye, L.J.H. & Rock, B. de & Vermeulen, F.M.P., 2007. "The collective model of household consumption: A nonparametric characterization," Open Access publications from Tilburg University urn:nbn:nl:ui:12-194157, Tilburg University.
    4. Carvajal, Andres & Ray, Indrajit & Snyder, Susan, 2004. "Equilibrium behavior in markets and games: testable restrictions and identification," Journal of Mathematical Economics, Elsevier, vol. 40(1-2), pages 1-40, February.

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