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Sharing Rule Identification for General Collective Consumption Models

  • Cherchye, Laurens

    ()

    (KU Leuven)

  • De Rock, Bram

    ()

    (ECARES, Free University of Brussels)

  • Lewbel, Arthur

    ()

    (Boston College)

  • Vermeulen, Frederic

    ()

    (KU Leuven)

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 Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6571.

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Length: 32 pages
Date of creation: May 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6571
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  19. Jeremy Lise & Shannon Seitz, 2007. "Consumption inequality and intra-household allocations," IFS Working Papers W07/09, Institute for Fiscal Studies.
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  27. Richard Blundell & Dennis Kristensen & Rosa Matzkin, 2011. "Bounding quantile demand functions using revealed preference inequalities," CeMMAP working papers CWP21/11, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  28. Laurens Cherchye & Bram De Rock & Frederic Vermeulen, 2008. "Economic well-being and poverty among the elderly: an analysis based on a collective consumption model," Working Papers ECARES 2008-026, ULB -- Universite Libre de Bruxelles.
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