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Sharing rule identification for general collective consumption models

  • Laurens CHERCHYE
  • Bram DE ROCK
  • Arthur LEWBEL
  • Frederic VERMEULEN

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 Katholieke Universiteit Leuven, Centrum voor Economische Studiën in its series Center for Economic Studies - Discussion papers with number ces12.05.

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Date of creation: May 2012
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Handle: RePEc:ete:ceswps:ces12.05
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  1. Cherchye, L.J.H. & de Rock, B. & Vermeulen, F.M.P., 2010. "Married with Children : A Collective Labor Supply Model with Detailed Time Use and Intrahousehold Expenditure Information," Discussion Paper 2010-99, Tilburg University, Center for Economic Research.
  2. Marjorie B. McElroy, 1990. "The Empirical Content of Nash-Bargained Household Behavior," Journal of Human Resources, University of Wisconsin Press, vol. 25(4), pages 559-583.
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  4. Galichon, Alfred & Henry, Marc, 2009. "A test of non-identifying restrictions and confidence regions for partially identified parameters," Journal of Econometrics, Elsevier, vol. 152(2), pages 186-196, October.
  5. Cherchye, L.J.H. & de Rock, B. & Vermeulen, F.M.P., 2004. "The Collective Model of Household Consumption : A Nonparametric Characterization," Discussion Paper 2004-76, Tilburg University, Center for Economic Research.
  6. M. Browning & P. A. Chiappori, 1998. "Efficient Intra-Household Allocations: A General Characterization and Empirical Tests," Econometrica, Econometric Society, vol. 66(6), pages 1241-1278, November.
  7. Bossert, Walter, 1993. "Continuous Choice Functions and the Strong Axiom of Revealed Preference," Economic Theory, Springer, vol. 3(2), pages 379-85, April.
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  9. Cherchye, Laurens & De Rock, Bram & Vermeulen, Frederic, 2008. "An Afriat Theorem for the Collective Model of Household Consumption," IZA Discussion Papers 3794, Institute for the Study of Labor (IZA).
  10. Richard Blundell & Pierre-Andre Chiappori & Thierry Magnac & Costas Meghir, 2007. "Collective Labour Supply: Heterogeneity and Non-Participation," Review of Economic Studies, Oxford University Press, vol. 74(2), pages 417-445.
  11. Jeremy Lise & Shannon Seitz, 2007. "Consumption inequality and intra-household allocations," IFS Working Papers W07/09, Institute for Fiscal Studies.
  12. Arie Beresteanu & Francesca Molinari, 2008. "Asymptotic Properties for a Class of Partially Identified Models," Econometrica, Econometric Society, vol. 76(4), pages 763-814, 07.
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  14. Lewbel, Arthur & Pendakur, Krishna, 2008. "Estimation of collective household models with Engel curves," Journal of Econometrics, Elsevier, vol. 147(2), pages 350-358, December.
  15. Martin Browning & Pierre-André Chiappori & Arthur Lewbel, 2013. "Estimating Consumption Economies of Scale, Adult Equivalence Scales, and Household Bargaining Power," Review of Economic Studies, Oxford University Press, vol. 80(4), pages 1267-1303.
  16. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
  17. Richard Blundell & Martin Browning & Ian Crawford, 2005. "Best nonparametric bounds on demand responses," IFS Working Papers W05/20, Institute for Fiscal Studies.
  18. BARGAIN Olivier & DONNI Olivier, 2010. "The Measurement of Child Costs: A Rothbarth-Type Method Consistent with Scale Economies and Parents’ Bargaining," LISER Working Paper Series 2010-30, LISER.
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  21. P.-A. Chiappori & I. Ekeland, 2009. "The Microeconomics of Efficient Group Behavior: Identification," Econometrica, Econometric Society, vol. 77(3), pages 763-799, 05.
  22. Laurens Cherchye & Bram De Rock & Frederik Vermeulen, 2008. "Economic well-being and poverty among the elderly: an analysis based on a collective consumption model," Center for Economic Studies - Discussion papers ces0807, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
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  24. Chiappori, P.A., 1989. "Collective Labour Supply and Welfare," DELTA Working Papers 89-07, DELTA (Ecole normale supérieure).
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