An empirical examination of household public goods provision

Households have many economic roles in society. One of such roles is to share household-level public goods that are jointly consumed by members of the household. Several theoretical models have been proposed in the literature: the unitary model, the non-cooperative game theoretical model and the bargaining model. Identifying those models is important due to implications for public policy. The unitary model predicts the amount of household public goods is neutral with respect to income distribution between husband and wife, and the non-cooperative game theoretical model predicts the neutrality of public goods when both the husband and the wife contribute household public goods. Using both the information on Japanese Tax reforms conducted in the 1990s as natural experiments and Japanese panel data that has information on household expenditures in detail, we examine the relevance of the unitary model and the non-cooperative game theoretical model. We found that the neutrality result does not hold in our data. This suggests that we need another economic theory since the unitary model, the non-cooperative game modle and the bargaining model also imply some types of neutrality