Provision of Household Public Goods and the Household Income Distribution

Several theoretical models have been proposed to explain household behavior, such as the unitary model, non-cooperative model, and cooperative model. These three models make different predictions about the provision of household public goods. By using both the Japanese tax reforms conducted in the 1990s as a quasi-natural experiment and Japanese panel data on household expenditure, I study how the within-household income distribution affects household public goods and discuss which model is most relevant. I find that the neutrality of the effect of the income distribution on household public goods does not hold, which shows the failure of the unitary model. I also find evidence that the non-cooperative model does not hold either. Finally, I argue that the observed data are consistent with the cooperative bargaining model.