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Household Consumption When the Marriage Is Stable

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  • Cherchye, Laurens

    () (KU Leuven)

  • Demuynck, Thomas

    () (Maastricht University)

  • De Rock, Bram

    () (ECARES, Free University of Brussels)

  • Vermeulen, Frederic

    () (KU Leuven)

Abstract

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.

Suggested Citation

  • Cherchye, Laurens & Demuynck, Thomas & De Rock, Bram & Vermeulen, Frederic, 2014. "Household Consumption When the Marriage Is Stable," IZA Discussion Papers 8070, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp8070
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    Citations

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    Cited by:

    1. Donni, Olivier & Molina, José Alberto, 2018. "Household Collective Models: Three Decades of Theoretical Contributions and Empirical Evidence," IZA Discussion Papers 11915, Institute for the Study of Labor (IZA).
    2. Laurens Cherchye & Bram De Rock & Selma Telalagic Walther & Frederic Vermeulen, 2016. "Where Did It Go Wrong? Marriage and Divorce In Malawi," Economics Series Working Papers 786, University of Oxford, Department of Economics.
    3. Laurens Cherchye & Thomas Demuynck & Bram De Rock & Frederic Vermeulen, 2017. "Household Consumption When the Marriage Is Stable," American Economic Review, American Economic Association, vol. 107(6), pages 1507-1534, June.
    4. Laurens Cherchye & Sam Cosaert & Thomas Demuynck & Bram De Rock, 2017. "Group Consumption with Caring Individuals," Working Papers ECARES ECARES 2017-45, ULB -- Universite Libre de Bruxelles.
    5. Olivier Bargain & Laurine Martinoty, 2018. "Crisis at Home: Mancession-induced Change in Intrahousehold Distribution," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-01770180, HAL.
    6. Victor H. Aguiar & Nail Kashaev, 2018. "Stochastic Revealed Preferences with Measurement Error," Papers 1810.05287, arXiv.org.
    7. Laurens Cherchye & Bram De Rock & Khushboo Surana & Frederic Vermeulen, 2016. " Marital matching, economies of scale and intrahousehold allocations," Working Papers Department of Economics 551159, KU Leuven, Faculty of Economics and Business, Department of Economics.

    More about this item

    Keywords

    marriage market; stable matching; Pareto efficient household consumption; testable implications; sharing rule identification; preference heterogeneity;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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