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Behind the Curtain: The Within-Household Sharing of Income

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  • Susanne Elsas
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    Abstract

    The distribution of personal income in a society depends strongly on the within-household distribution of income. Nevertheless, little is known about this phenomenon. I analyze the sharing of income among household partners from a welfare economic perspective. Measures of financial satisfaction for both household partners are used to gain information about the within-household distribution of income-induced well-being. A model of satisfaction differences between household partners is developed and estimated using 10 waves (1999 to 2008) of the German Socio-Economic Panel Study. Differences in financial satisfaction within couples are generally small. However, satisfaction is not a direct measure of welfare. For this reason, covariates are included to control for the partners’ different characteristics, influencing the expression of satisfaction. Using panel data allows us to account for unobserved heterogeneity at the household level, which is one major advancement of this analysis. The results show that the partners’ relative earned income has a substantial effect on the distribution of income-induced well-being, whereas the relative amount of transfer income does not.

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    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.373723.de/diw_sp0382.pdf
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    Bibliographic Info

    Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 382.

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    Length: 27 p.
    Date of creation: 2011
    Date of revision:
    Handle: RePEc:diw:diwsop:diw_sp382

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    Related research

    Keywords: income pooling; personal income; welfare; family; subjective well-being;

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    1. Bernard M.S. van Praag & Paul Frijters, 1999. "The measurement of welfare and well-being; the Leyden approach," School of Economics and Finance Discussion Papers and Working Papers Series 071a, School of Economics and Finance, Queensland University of Technology.
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    Cited by:
    1. Susanne Elsas, 2013. "Pooling and Sharing Income within Households: A Satisfaction Approach," SOEPpapers on Multidisciplinary Panel Data Research 587, DIW Berlin, The German Socio-Economic Panel (SOEP).

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