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Economic well-being and poverty among the elderly: an analysis based on a collective consumption model

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  • Laurens Cherchye
  • Bram De Rock
  • Frederik Vermeulen

Abstract

We apply the collective consumption model of Browning, Chiappori and Lewbel (2006) to analyse economic well-being and poverty among the elderly. The model focuses on individual preferences, a consumption technology that captures the economies of scale of living in a couple, and a sharing rule that governs the intra-household allocation of resources. The model is applied to a time series of Dutch consumption expenditure surveys. Our empirical results indicate substantial economies of scale and a wife’s share that is increasing in total expenditures. We further calculated poverty rates by means of the collective consumption model. Collective poverty rates of widows and widowers turn out to be slightly lower than traditional ones based on a standard equivalence scale. Poverty among women (men) in elderly couples, however, seems to be heavily underestimated (overestimated) by the traditional approach. Finally, we analysed the impact of becoming a widow(er). Based on cross-sectional evidence, we find that the drop (increase) in material well-being following the husband’s death is substantial for women in high (low) expenditure couples. For men, the picture is reversed.

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Bibliographic Info

Paper provided by Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces0807.

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Date of creation: Mar 2008
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Handle: RePEc:ete:ceswps:ces0807

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Keywords: collective model; intra-household allocation; indi¤erence scales; economies of scale; poverty.;

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  4. Cherchye, L.J.H. & Rock, B. de & Vermeulen, F.M.P., 2005. "Opening the Black Box of Intra-Household Decision-Making: Theory and Non-Parametric Empirical Tests of General Collective Consumption Models," Discussion Paper 2005-51, Tilburg University, Center for Economic Research.
  5. Frederic VERMEULEN, 2000. "Collective Household Models: Principles and Main Results," Center for Economic Studies - Discussion papers ces0028, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
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Citations

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Cited by:
  1. Laurens CHERCHYE & Bram DE ROCK & Arthur LEWBEL & Frederic VERMEULEN, 2012. "Sharing rule identification for general collective consumption models," Center for Economic Studies - Discussion papers ces12.05, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  2. repec:hal:wpaper:halshs-00586686 is not listed on IDEAS
  3. Lucia Mangiavacchi & Luca Piccoli, 2009. "Child welfare and intra-household inequality in Albania," Working Papers 149, ECINEQ, Society for the Study of Economic Inequality.
  4. Dekkers, Gijs, 2008. "Are the old poor? A discussion and some cursory evidence," MPRA Paper 29436, University Library of Munich, Germany.
  5. Lewbel, Arthur & Pendakur, Krishna, 2008. "Estimation of collective household models with Engel curves," Journal of Econometrics, Elsevier, vol. 147(2), pages 350-358, December.
  6. Bütikofer, Aline & Gerfin, Michael, 2009. "The Economies of Scale of Living Together and How They Are Shared: Estimates Based on a Collective Household Model," IZA Discussion Papers 4327, Institute for the Study of Labor (IZA).
  7. Hélène Couprie & Gaëlle Ferrant, 2012. "Welfare Comparisons, Economies of Scale and Equivalence Scale in Time Use," THEMA Working Papers 2012-43, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.

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