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Pareto-Inefficiencies in Intrahousehold-Decision-Making: Empirical evidence from Germany

  • Stöwhase, Sven

The present paper offers empirical evidence for pareto-inefficiencies within German households. Using a large dataset from the German income tax statistic and conducting microsimulation analysis it refutes the assumption of pareto-efficiencies underlying the unitary as well as cooperative bargaining models of the household. The analysis is based on the unique features of the German source tax on wage income which give married couples some degree of freedom when determining their total tax liability and its distribution among spouses. We interpret distributive choices that do not minimize total tax withholding as the outcome of ineffiencient intra-family bargaining. Our result supports the findings of previous empirical work for developing countries and call for a reconsideration of the dominant models on intrahousehold-decision-making.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 13131.

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Date of creation: 31 Jan 2009
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Handle: RePEc:pra:mprapa:13131
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  1. Martin Browning & P.A. Chiappori, 1996. "Efficient Intra-Household Allocations - A General Characterization and Empirical Tests," Discussion Papers 96-10, University of Copenhagen. Department of Economics.
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  9. Djebbari, Habiba, 2005. "The Impact on Nutrition of the Intrahousehold Distribution of Power," IZA Discussion Papers 1701, Institute for the Study of Labor (IZA).
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  13. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
  14. Peter Kooreman & Arie Kapteyn, 1990. "On the Empirical Implementation of Some Game Theoretic Models of Household Labor Supply," Journal of Human Resources, University of Wisconsin Press, vol. 25(4), pages 584-598.
  15. Orazio Attanasio & Valérie Lechene, 2002. "Tests of Income Pooling in Household Decisions," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 5(4), pages 720-748, October.
  16. Christopher R. Udry & Esther Duflo, 2004. "Intrahousehold Resource Allocation in Cote D'Ivoire: Social Norms, Separate Accounts and Consumption Choices," Yale School of Management Working Papers ysm407, Yale School of Management.
  17. 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.
  18. Udry, Christopher & Hoddinott, John & Alderman, Harold & Haddad, Lawrence, 1995. "Gender differentials in farm productivity: implications for household efficiency and agricultural policy," Food Policy, Elsevier, vol. 20(5), pages 407-423, October.
  19. Lundberg, Shelly & Pollak, Robert A, 1993. "Separate Spheres Bargaining and the Marriage Market," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 988-1010, December.
  20. Benno Torgler, 2002. "Does Culture Matter? Tax Morale in East-West-German Comparison," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(4), pages 504-, December.
  21. Grossbard-Shechtman, Shoshana Amyra, 1984. "A Theory of Allocation of Time in Markets for Labour and Marriage," Economic Journal, Royal Economic Society, vol. 94(376), pages 863-82, December.
  22. Udry, Christopher, 1996. "Gender, Agricultural Production, and the Theory of the Household," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 1010-46, October.
  23. Kooreman, P. & Kapteyn, A.J., 1990. "On the empirical implementation of some game theoretic models of household labor supply," Other publications TiSEM 4c9bb2ae-f1e6-4924-8cae-3, Tilburg University, School of Economics and Management.
  24. Jill Tiefenthaler, 1999. "The sectoral labor supply of married couples in Brazil: Testing the unitary model of household behavior," Journal of Population Economics, Springer, vol. 12(4), pages 591-606.
  25. Shelly J. Lundberg & Robert A. Pollak & Terence J. Wales, 1997. "Do Husbands and Wives Pool Their Resources? Evidence from the United Kingdom Child Benefit," Journal of Human Resources, University of Wisconsin Press, vol. 32(3), pages 463-480.
  26. Romich, Jennifer L. & Weisner, Thomas, 2000. "How Families View and Use the EITC: Advance Payment versus Lump Sum Delivery," National Tax Journal, National Tax Association, vol. 53(n. 4), pages 1245-66, December.
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