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Estimation of the Sharing Rule between Adults and Children and Related Equivalence Scales within a Collective Consumption Framework

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  • Carlos Arias

    ()

  • Vincenzo Atella

    ()

  • Raffaella Castagnini

    ()

  • Federico Perali

    ()

Abstract

In order to determine how much money is needed to make each household member as well off as they were before a change in living conditions, equivalence scales should be defined on the basis of individual rather than household welfare. This requires the knowledge of individual utilities that are derivable from the identification of the rule governing the intra-household allocation of resources within a collective approach. We pursue this objective using information about male, female and children clothing expenditure present in the 1999 Italian Household budget survey within the estimation of a complete demand system. The sharing rule between adults and children is estimated using a structural rather than a reduced form approach. Maximum simulated likelihood is used to estimate a collective model of individual demand equations with zero expenditures for the exclusive good clothing. The recovery of individual utilities for adults and children permits the estimation of the cost of children taking the intra-household distribution of resources into account. We show that the cost of Italian children is significantly affected by the parents’ aversion to intra-household inequality.

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Bibliographic Info

Paper provided by CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY in its series CHILD Working Papers with number wp07_03.

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Length: 31 pages
Date of creation: Jul 2003
Date of revision:
Handle: RePEc:wpc:wplist:wp07_03

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Keywords: Collective Approach; Sharing Rule; Clothing; Equivalence Scales;

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Cited by:
  1. Eleonora Matteazzi & Martina Menon & Federico Perali, 2013. "An Equilibrium Analysis of a Collective Farm-Household Model: Policy and Welfare Simulations," Working Papers 20/2013, University of Verona, Department of Economics.
  2. M. Menon & F. Perali & F. Rosati, 2005. "The Shadow Wage of Child Labour: An Application to Nepal," UCW Working Paper 11, Understanding Children's Work (UCW Programme).
  3. repec:hal:wpaper:halshs-00586686 is not listed on IDEAS
  4. Marcella Veronesi & Martina Menon & Federico Perali, 2007. "Extensions of the Traditional Travel Cost Model of Non-Market Valuation to a Collective Framework: Evidence from the Field," Working Papers 42/2007, University of Verona, Department of Economics.

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