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Sharing Rule Identification for General Collective Consumption Models

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  • Cherchye, L.J.H.
  • Rock, B. de
  • Lewbel, A.
  • Vermeulen, F.M.P.

    (Tilburg University, Center for Economic Research)

Abstract

Abstract: We propose a method to identify bounds (i.e. set identification) on the sharing rule for a general collective household consumption model. Unlike the effects of distribution factors, it is well known that the level of the sharing rule cannot be uniquely identified without strong assumptions on preferences across households of different compositions. Our new results show that, though not point identified without these assumptions, bounds on the sharing rule can still 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. An empirical application demonstrates the practical usefulness of our method.

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Bibliographic Info

Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2012-041.

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Date of creation: 2012
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Handle: RePEc:dgr:kubcen:2012041

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Web page: http://center.uvt.nl

Related research

Keywords: collective model; consumer demand; revealed preferences; sharing rule; identification; bounds;

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References

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  1. Laurens Cherchye & Bram De Rock & Frederic Vermeulen, 2007. "The Collective Model of Household Consumption: A Nonparametric Characterization," Econometrica, Econometric Society, vol. 75(2), pages 553-574, 03.
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  23. Cherchye, Laurens & De Rock, Bram & Vermeulen, Frederic, 2010. "Married with Children: A Collective Labor Supply Model with Detailed Time Use and Intrahousehold Expenditure Information," IZA Discussion Papers 5190, Institute for the Study of Labor (IZA).
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  25. Laurens Cherchye & Bram De Rock & Frederic Vermeulen, 2011. "The Revealed Preference Approach to Collective Consumption Behaviour: Testing and Sharing Rule Recovery," Review of Economic Studies, Oxford University Press, vol. 78(1), pages 176-198.
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Cited by:
  1. Colombino, Ugo & Narazani, Edlira, 2012. "What's Best for Women: Gender Based Taxation, Wage Subsidies or Basic Income?," IZA Discussion Papers 6828, Institute for the Study of Labor (IZA).
  2. Colombino, Ugo & Narazani, Edlira, 2013. "What’s best for women: gender based taxation, wage subsidies or basic income?," EUROMOD Working Papers EM10/13, EUROMOD at the Institute for Social and Economic Research.

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