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Observable and Unobservable Household Sharing Rules: Evidence from Young Couples' Pocket Money

  • Lee, Jungmin

    ()

    (Sogang University)

The leading evidence against the unitary household models is that "who gets what" is significantly dependent upon "who earns how much." However, it is difficult to pin down the causal effect of relative earnings on intra-household resource allocation because households jointly decide both labor supply and consumption. I utilize longitudinal data to analyze the spouse's individual budgets – "pocket money." This unique data set allows for the specification of the simultaneous process of household decision-making in a fully stochastic fashion. By doing this, it is possible to differentiate unobserved spousal bargaining power from heterogeneity at the household level. The results imply that the balance of power between spouses is stable over time and robust to transitory changes in relative earnings. Public policies targeting the disadvantaged within households should be designed and implemented on the long-term basis.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1250.

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Length: 46 pages
Date of creation: Aug 2004
Date of revision:
Publication status: published under revised title in: Economic Development and Cultural Change, 2007, 55 (3), 557-582
Handle: RePEc:iza:izadps:dp1250
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  7. Pierre-André Chiappori & Bernard Fortin & Guy Lacroix, 2001. "Marriage Market, Divorce Legislation and Household Labor Supply," CIRANO Working Papers 2001s-16, CIRANO.
  8. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-67, June.
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  10. T. Paul Schultz, 1990. "Testing the Neoclassical Model of Family Labor Supply and Fertility," Journal of Human Resources, University of Wisconsin Press, vol. 25(4), pages 599-634.
  11. Haddad, Lawrence & Kanbur, Ravi, 1990. "Are better off households more unequal or less unequal ?," Policy Research Working Paper Series 373, The World Bank.
  12. Lundberg, Shelly J, 1988. "Labor Supply of Husbands and Wives: A Simultaneous Equations Approach," The Review of Economics and Statistics, MIT Press, vol. 70(2), pages 224-35, May.
  13. Stefan Dercon & Pramila Krishnan, 1997. "In sickness and in health... risk-sharing within households in rural Ethiopia," Economics Series Working Papers WPS/1997-12, University of Oxford, Department of Economics.
  14. Browning, Martin & Meghir, Costas, 1991. "The Effects of Male and Female Labor Supply on Commodity Demands," Econometrica, Econometric Society, vol. 59(4), pages 925-51, July.
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  16. Jennifer Ward-Batts, 2003. "Out of the Wallet and into the Purse: Using Micro Data to Test Income Pooling," Claremont Colleges Working Papers 2003-10, Claremont Colleges.
  17. Bourguignon, F. & Browning, M. & Chiappori, P.A. & Lechene, V., 1992. "Intra Household Allocation of Consumption : A Model and Some Evidence from French Data," DELTA Working Papers 92-08, DELTA (Ecole normale supérieure).
  18. Duncan Thomas, 1990. "Intra-Household Resource Allocation: An Inferential Approach," Journal of Human Resources, University of Wisconsin Press, vol. 25(4), pages 635-664.
  19. Browning, Martin & Francois Bourguignon & Pierre-Andre Chiappori & Valerie Lechene, 1994. "Income and Outcomes: A Structural Model of Intrahousehold Allocation," Journal of Political Economy, University of Chicago Press, vol. 102(6), pages 1067-96, December.
  20. Jacobsen, Joyce P & Rayack, Wendy L, 1996. "Do Men Whose Wives Work Really Earn Less?," American Economic Review, American Economic Association, vol. 86(2), pages 268-73, May.
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  23. Lundberg, S.J. & Pollak, R.A. & Wales, T.J., 1994. "Do Husbands and Wives Pool Their Resources? Evidence from U.K. Child Benefit," Discussion Papers in Economics at the University of Washington 94-6, Department of Economics at the University of Washington.
  24. Pollak, Robert A, 1994. "For Better or Worse: The Roles of Power in Models of Distribution within Marriage," American Economic Review, American Economic Association, vol. 84(2), pages 148-52, May.
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