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Sharing Rule Identification for General Collective Consumption Models

Listed author(s):
  • Laurens Cherchye

    (CES, University of Leuven)

  • Bram De Rock

    (ECARES and ECORE, Université Libre de Bruxelles)

  • Arthur Lewbel

    ()

    (Boston College)

  • Frederic Vermeulen

    (CentER, Tilburg University)

We propose a method to identify bounds (i.e. set identification) on the sharing rule for a general collective household consumption model. Unlike the effects of distribution factors, it is well known that the level of the sharing rule cannot be uniquely identified without strong assumptions on preferences across households of different compositions. Our new results show that, though not point identified without these assumptions, bounds on the sharing rule can still be obtained. We get these bounds by applying revealed preference restrictions implied by the collective model to the household’s continuous aggregate demand functions. We obtain informative bounds even if nothing is known about whether each good is public, private, or assignable within the household, though having such information tightens the bounds. An empirical application demonstrates the practical usefulness of our method.

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Paper provided by Boston College Department of Economics in its series Boston College Working Papers in Economics with number 809.

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Date of creation: 15 May 2012
Date of revision: 01 Jul 2013
Handle: RePEc:boc:bocoec:809
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