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Income and bargaining effects on education and health

  • Ponczek, Vladimir Pinheiro

In this paper, we examine the impacts of the reform in the rural pension system in Brazil in 1991 on schooling and health indicators. In addition, we use the reform to investigate the validity of the unitary model of household allocation by testing if there were uneven impacts on those indicators depending on the gender of the recipient. The main conclusion of the paper is that the reform had significantly positive effects on the outcomes of interest, especially on those co-residing with a male pensioner, indicating that the unitary model is not a well-specified framework to understand family allocation decisions. The highest impacts were on school attendance for boys, literacy for girls and illness for middle-age people. We explore a collective model as defined by Chiappori (1992) as one possible alternative representation for the decision-making process of the poor rural Brazilian families. In the cooperative Nash equilibrium, the reform effects can be divided into two pieces: a direct income effect and bargaining power effect. The data support the existence of these two different effects

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Paper provided by Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil) in its series Textos para discussão with number 216.

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Date of creation: 05 May 2010
Date of revision:
Handle: RePEc:fgv:eesptd:216
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