Individual Euler Equations Rather Than Household Euler Equations
AbstractThis paper focuses on the identification and estimation of the intertemporal and intratemporal elasticities of substitution for the wife and separately for the husband using individual Euler equations. To that end, the household is represented as a group of agents making joint decisions. By means of this framework, individual Euler equations are derived and used to identify and estimate the parameters of interest. The main advantage of this approach is that the key parameters can be identified for all household members and not only for the household as a whole. To implement this approach it is essential to deal with an important issue: individual Euler equations depend on individual consumption which is not observable. In this paper it is shown that individual Euler equations are identified when only data on household consumption, individual labor supply and individual wages are observed. The identification strategy is then used to estimate the elasticities of substitution using the Consumer Expenditure Survey
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Bibliographic InfoPaper provided by Econometric Society in its series Econometric Society 2004 North American Summer Meetings with number 497.
Date of creation: 11 Aug 2004
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intertemporal household decisions; intertemporal collective models; Euler equations; intertemporal elasticity of substitution;
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- Pierre-André Chiappori & Olivier Donni, 2004.
"Les modèles non-unitaires de comportement du ménage: un survol de la littérature,"
Cahiers de recherche
- Chiappori, Pierre-André & Donni, Olivier, 2006. "Les modèles non unitaires de comportement du ménage : un survol de la littérature," L'Actualité Economique, Société Canadienne de Science Economique, vol. 82(1), pages 9-52, mars-juin.
- Olivier Donni, 2004. "A Collective Model of Household Behavior with Private and Public Goods: Theory and Some Evidence from U.S. Data," Cahiers de recherche 0402, CIRPEE.
- Donni, Olivier, 2006. "The Intrahousehold Allocation of Private and Public Consumption: Theory and Evidence from U.S. Data," IZA Discussion Papers 2137, Institute for the Study of Labor (IZA).
- John Knowles, 2005.
"Why are Married Men Working So Much?,"
PIER Working Paper Archive
05-031, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
- Chiappori, Pierre-André & Donni, Olivier, 2009. "Non-unitary Models of Household Behavior: A Survey of the Literature," IZA Discussion Papers 4603, Institute for the Study of Labor (IZA).
- Olivier Donni, 2004. "A Collective Model of Household Behavior with Private and Public Goods: Theory and Evidence from US Data," Econometric Society 2004 Latin American Meetings 26, Econometric Society.
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