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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
  • Frederic Vermeulen

Abstract

We apply the collective consumption model of Browning et al. (2010) 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 two sets of poverty rates: one based on the collective consumption model and one based on the traditional approach with a standard equivalence scale. Poverty among widowers is underestimated by the traditional approach. The same is true for women (men) in elderly couples for the first (later) time periods in our analysis. Finally, we analysed the impact of becoming a widow(er). Based on cross-sectional evidence, we find that the drop in material well-being following the husband's death is rather substantial for women. For men, the picture is reversed.

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Bibliographic Info

Paper provided by ULB -- Universite Libre de Bruxelles in its series ULB Institutional Repository with number 2013/131702.

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Date of creation: 2012
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Publication status: Published in: European economic review (2012) v.56 n° 6,p.985–1000
Handle: RePEc:ulb:ulbeco:2013/131702

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References

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Cited by:
  1. repec:hal:wpaper:halshs-00586686 is not listed on IDEAS
  2. Lewbel, Arthur & Pendakur, Krishna, 2008. "Estimation of collective household models with Engel curves," Journal of Econometrics, Elsevier, vol. 147(2), pages 350-358, December.
  3. Cherchye, Laurens & De Rock, Bram & Lewbel, Arthur & Vermeulen, Frederic, 2012. "Sharing Rule Identification for General Collective Consumption Models," IZA Discussion Papers 6571, Institute for the Study of Labor (IZA).
  4. Dekkers, Gijs, 2008. "Are the old poor? A discussion and some cursory evidence," MPRA Paper 29436, University Library of Munich, Germany.
  5. Aline Bütikofer & Michael Gerfin, 2009. "The economies of scale of living together and how they are shared - Estimates based on a collective household model," Diskussionsschriften dp0903, Universitaet Bern, Departement Volkswirtschaft.
  6. 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.
  7. Lucia Mangiavacchi & Luca Piccoli, 2009. "Child welfare and intra-household inequality in Albania," Working Papers 149, ECINEQ, Society for the Study of Economic Inequality.

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