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Household Consumption When the Marriage Is Stable

  • Cherchye, Laurens

    ()

    (K.U.Leuven)

  • Demuynck, Thomas

    ()

    (Maastricht University)

  • De Rock, Bram

    ()

    (ECARES, Free University of Brussels)

  • Vermeulen, Frederic

    ()

    (Tilburg University)

We develop a novel framework to analyze the structural implications of the marriage market for household consumption patterns. We start by defining a revealed preference characterization of efficient household consumption when the marriage is stable. In particular, stability means that the marriage matching is individually rational and has no blocking pairs. We show that this revealed preference characterization generates testable conditions even if there is only a single consumption observation per household and individual preferences are heterogeneous across households. In addition, the characterization allows for identifying the intrahousehold decision structure (including the sharing rule) under the same minimalistic assumptions. An application to Dutch household data demonstrates the empirical usefulness of our theoretical results.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 8070.

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Length: 27 pages
Date of creation: Mar 2014
Date of revision:
Handle: RePEc:iza:izadps:dp8070
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  5. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-67, June.
  6. Daniela Del Boca & Christopher J. Flinn, 2012. "Household Behavior and the Marriage Market," Carlo Alberto Notebooks 254, Collegio Carlo Alberto.
  7. Richard Blundell & André Chiappori & Thierry Magnac & Costas Meghir, 1998. "Collective labour supply: heterogeneity and non-participation," IFS Working Papers W98/20, Institute for Fiscal Studies.
  8. Lechene, Valérie & Preston, Ian, 2011. "Noncooperative household demand," Journal of Economic Theory, Elsevier, vol. 146(2), pages 504-527, March.
  9. Pierre-André Chiappori & Bernard Fortin & Guy Lacroix, 2001. "Marriage Market, Divorce Legislation and Household Labor Supply," CIRANO Working Papers 2001s-16, CIRANO.
  10. 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.
  11. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, vol. 50(4), pages 945-73, July.
  12. Dupuy, Arnaud & Galichon, Alfred, 2012. "Personality Traits and the Marriage Market," IZA Discussion Papers 6943, Institute for the Study of Labor (IZA).
  13. Stoye, Jörg & Kitamura, Yuichi, 2013. "Nonparametric Analysis of Random Utility Models: Testing," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79753, Verein für Socialpolitik / German Economic Association.
  14. Laurens Cherchye & Bram De Rock & Frederic Vermeulen, 2009. "Opening the black box of intrahousehold decision making: theory and nonparametric empirical tests of general collective consumption models," ULB Institutional Repository 2013/98561, ULB -- Universite Libre de Bruxelles.
  15. Sonia Oreffice, 2008. "Sexual Orientation and Household Decision Making. Same-Sex Couples’ Balance of Power and Labor Supply Choices," Working Papers 2008.81, Fondazione Eni Enrico Mattei.
  16. Chiappori, Pierre-Andre, 2010. "Testable implications of transferable utility," Journal of Economic Theory, Elsevier, vol. 145(3), pages 1302-1317, May.
  17. Cherchye, L.J.H. & Demuynck, T. & de Rock, B., 2011. "Is Utility Transferable? A Revealed Preference Analysis," Discussion Paper 2011-018, Tilburg University, Center for Economic Research.
  18. Shannon Seitz & Jeremy Lise, 2005. "Consumption Inequality and Intra-Household Allocations," 2005 Meeting Papers 448, Society for Economic Dynamics.
  19. Nicolas Jacquemet & Jean-Marc Robin, 2013. "Assortative matching and search with labour supply and home production," CeMMAP working papers CWP07/13, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  20. Martin Browning & Valerie Lechene & Pierre-Andre Chiappori, 2006. "Distributional effects in household models: separate spheres and income pooling," Economics Series Working Papers 293, University of Oxford, Department of Economics.
  21. Laurens CHERCHYE & Bram DE ROCK & Arthur LEWBEL & Frederic VERMEULEN, 2012. "Sharing rule identification for general collective consumption models," Center for Economic Studies - Discussion papers ces12.05, Katholieke Universiteit Leuven, Centrum voor Economische Studiën.
  22. Cherchye, Laurens & De Rock, Bram & Vermeulen, Frederic, 2010. "Married with Children: A Collective Labor Supply Model with Detailed Time Use and Intrahousehold Expenditure Information," IZA Discussion Papers 5190, Institute for the Study of Labor (IZA).
  23. Shintaro Yamaguchi & Claudia Ruiz & Maurizio Mazzocco, 2014. "Labor Supply, Wealth Dynamics and Marriage Decisions," 2014 Meeting Papers 210, Society for Economic Dynamics.
  24. Laurens Cherchye & Bram De Rock & Frederic Vermeulen, 2011. "The Revealed Preference Approach to Collective Consumption Behaviour: Testing and Sharing Rule Recovery," Review of Economic Studies, Oxford University Press, vol. 78(1), pages 176-198.
  25. Richard Blundell & Martin Browning & Ian Crawford, 2008. "Best Nonparametric Bounds on Demand Responses," Econometrica, Econometric Society, vol. 76(6), pages 1227-1262, November.
  26. 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.
  27. Couprie, Hélène & Peluso, Eugenio & Trannoy, Alain, 2010. "Is power more evenly balanced in poor households?," Journal of Public Economics, Elsevier, vol. 94(7-8), pages 493-507, August.
  28. Martin Browning & Pierre-Andrée Chiappori & Arthur Lewbel, 2004. "Estimating Consumption Economies of Scale, Adult Equivalence Scales, and Household Bargaining Power," Boston College Working Papers in Economics 588, Boston College Department of Economics, revised 01 Sep 2010.
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  31. Geoffrey R. Dunbar & Arthur Lewbel & Krishna Pendakur, 2013. "Children's Resources in Collective Households: Identification, Estimation, and an Application to Child Poverty in Malawi," American Economic Review, American Economic Association, vol. 103(1), pages 438-71, February.
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  33. Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 813-46, July-Aug..
  34. Chiappori, P.A. & Ekeland, I., 2006. "The micro economics of group behavior: General characterization," Journal of Economic Theory, Elsevier, vol. 130(1), pages 1-26, September.
  35. Federico Echenique & Sangmok Lee & Matthew Shum & M. Bumin Yenmez, 2013. "The Revealed Preference Theory of Stable and Extremal Stable Matchings," Econometrica, Econometric Society, vol. 81(1), pages 153-171, 01.
  36. Varian, Hal R., 1988. "Revealed preference with a subset of goods," Journal of Economic Theory, Elsevier, vol. 46(1), pages 179-185, October.
  37. 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.
  38. Blundell, Richard & Kristensen, Dennis & Matzkin, Rosa, 2014. "Bounding quantile demand functions using revealed preference inequalities," Journal of Econometrics, Elsevier, vol. 179(2), pages 112-127.
  39. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
  40. Jeanne Lafortune & Pierre-Andre Chiappori & Murat Iyigun & Yoram Weiss, 2012. "Changing the Rules Midway: The Impact of Granting Alimony Rights on Existing and Newly-Formed Partnerships," Documentos de Trabajo 424, Instituto de Economia. Pontificia Universidad Católica de Chile..
  41. Eugene Choo & Aloysius Siow, 2006. "Who Marries Whom and Why," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 175-201, February.
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