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Household Consumption When the Marriage is Stable

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  • Laurens Cherchye
  • Thomas Demuynck
  • Bram De Rock
  • Frederic Vermeulen

Abstract

We develop a novel framework to analyze the structural implications of the marriage market for house-hold consumption patterns. We start by de ning a revealed preference characterization of e¢ cient householdconsumption when the marriage is stable. In particular, stability means that the marriage matching is indi-vidually rational and has no blocking pairs. We show that this revealed preference characterization generatestestable conditions even if there is only a single consumption observation per household and individual pref-erences are heterogeneous across households. In addition, the characterization allows for identifying theintrahousehold decision structure (including the sharing rule) under the same minimalistic assumptions. Anapplication to Dutch household data demonstrates the empirical usefulness of our theoretical results.

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Bibliographic Info

Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers ECARES with number ECARES 2014-21.

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Length: 25 p.
Date of creation: Apr 2014
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Publication status: Published by:
Handle: RePEc:eca:wpaper:2013/159546

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Keywords: marriage market; stable matching; Pareto efficient household consumption; testable implications; sharing rule identification; preference heterogeneity;

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