Advanced Search
MyIDEAS: Login to save this paper or follow this series

Pooling and Sharing Income within Households: A Satisfaction Approach

Contents:

Author Info

  • Susanne Elsas
Registered author(s):

    Abstract

    Standard household economics assumes that couples pool their incomes and share the sum equally, which is a necessary prerequisite for computing equivalent incomes and hence all statements about the distribution of personal incomes and income poverty. However, since cohabitation without marriage is on the rise and since income pooling is less frequent among cohabiting couples, income is also pooled and shared less frequently. In conclusion, statements based on these two assumption are becoming increasingly invalid. Using data from the German Socio-Economic Panel Study, I analyze the incidence and determinants of income pooling and then proceed to determine whether couples who pool their incomes share the sum equally. In contrast to most existing studies, I use a holistic approach to identify sharing within households by analyzing data on financial satisfaction. Concerning the relation between income sharing and income pooling, I account not only for the dominance of pooling over sharing, but also for the possibility of correlated error terms of the pooling and the sharing equation. A further advancement of this paper is the use of panel data, which enables me to account for unobserved heterogeneity at the household level. The results indicate that the hypothesis of equal sharing even has to be rejected for couples who pool their incomes, which implies that a wide range of analyses of income poverty, for instance, may be misleading.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.428089.de/diw_sp0587.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 587.

    as in new window
    Length: 30 p.
    Date of creation: 2013
    Date of revision:
    Handle: RePEc:diw:diwsop:diw_sp587

    Contact details of provider:
    Postal: Mohrenstraße 58, D-10117 Berlin
    Phone: xx49-30-89789-671
    Fax: xx49-30-89789-109
    Email:
    Web page: http://www.diw.de/en/soep
    More information through EDIRC

    Related research

    Keywords: Income pooling; intra-household allocation; subjective well-being; two-part model;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, National Bureau of Economic Research, Inc, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492 National Bureau of Economic Research, Inc.
    2. Martin Browning & Jens Bonke, 2009. "Pooling of income and sharing of consumption within households," Economics Series Working Papers, University of Oxford, Department of Economics 428, University of Oxford, Department of Economics.
    3. Cahit Guven & Claudia Senik & Holger Stichnoth, 2011. "You can't be happier than your wife. Happiness Gaps and Divorce," PSE Working Papers, HAL halshs-00555427, HAL.
    4. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP) – Scope, Evolution and Enhancements," Schmollers Jahrbuch : Journal of Applied Social Science Studies / Zeitschrift für Wirtschafts- und Sozialwissenschaften, Duncker & Humblot, Berlin, Duncker & Humblot, Berlin, vol. 127(1), pages 139-169.
    5. Anne Winkler, 1997. "Economic decision-making by cohabitors: findings regarding income pooling," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 29(8), pages 1079-1090.
    6. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 114(497), pages 641-659, 07.
    7. Stutzer, Alois, 2004. "The role of income aspirations in individual happiness," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 54(1), pages 89-109, May.
    8. Phipps, Shelley A & Burton, Peter S, 1998. "What's Mine Is Yours? The Influence of Male and Female Incomes on Patterns of Household Expenditure," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 65(260), pages 599-613, November.
    9. Leung, S.F. & Yu, S., 1996. "Collinearity and Two-Step Estimation of Sample Selection Models: Problems, Origins and Remedies," RCER Working Papers, University of Rochester - Center for Economic Research (RCER) 419, University of Rochester - Center for Economic Research (RCER).
    10. David Madden, 2006. "Sample Selection Versus Two-Part Models Revisited: the Case of Female Smoking and Drinking," Health, Econometrics and Data Group (HEDG) Working Papers, HEDG, c/o Department of Economics, University of York 06/12, HEDG, c/o Department of Economics, University of York.
    11. Johannes Schwarze, 2003. "Using Panel Data on Income Satisfaction to Estimate Equivalence Scale Elasticity," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 49(3), pages 359-372, 09.
    12. Jens Bonke & Martin Browning, 2009. "The distribution of financial well-being and income within the household," Review of Economics of the Household, Springer, Springer, vol. 7(1), pages 31-42, March.
    13. Susanne Elsas, 2011. "Behind the Curtain: The Within-Household Sharing of Income," SOEPpapers on Multidisciplinary Panel Data Research 382, DIW Berlin, The German Socio-Economic Panel (SOEP).
    14. Ekaterina Kalugina & Natalia Radtchenko & Catherine Sofer, 2009. "How Do Spouses Share Their Full Income? Identification Of The Sharing Rule Using Self-Reported Income," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 55(2), pages 360-391, 06.
    15. Jones, Andrew M, 1989. "A Double-Hurdle Model of Cigarette Consumption," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 4(1), pages 23-39, Jan.-Mar..
    16. Browning, Martin & Francois Bourguignon & Pierre-Andre Chiappori & Valerie Lechene, 1994. "Income and Outcomes: A Structural Model of Intrahousehold Allocation," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 102(6), pages 1067-96, December.
    17. Frick, Joachim R. & Goebel, Jan & Schechtman, Edna & Wagner, Gert G. & Yitzhaki, Shlomo, 2004. "Using Analysis of Gini (ANoGi) for Detecting Whether Two Sub-Samples Represent the Same Universe: The SOEP Experience," IZA Discussion Papers 1049, Institute for the Study of Labor (IZA).
    18. Shelley A. Phipps & Peter S. Burton, 1995. "Sharing within Families: Implications for the Measurement of Poverty among Individuals in Canada," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 28(1), pages 177-204, February.
    19. Kulic, Nevena, 2013. "The type and duration of family unions and income sharing: The implications for women's economic well-being," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 44(C), pages 7-15.
    20. Phipps, Shelley & Woolley, Frances, 2008. "Control over money and the savings decisions of Canadian households," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, Elsevier, vol. 37(2), pages 592-611, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:diw:diwsop:diw_sp587. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bibliothek).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.