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

Listed author(s):
  • 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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File URL: https://mpra.ub.uni-muenchen.de/13131/1/MPRA_paper_13131.pdf
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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
Handle: RePEc:pra:mprapa:13131
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  1. Browning, M. & Bourguignon, F. & Chiappori, P.A. & Lechene, V., 1992. "Incomes and Outcomes: A structural Model of Intra-Household Allocation," DELTA Working Papers 92-23, DELTA (Ecole normale supérieure).
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  3. Djebbari, Habiba, 2005. "The Impact on Nutrition of the Intrahousehold Distribution of Power," IZA Discussion Papers 1701, Institute for the Study of Labor (IZA).
  4. Orazio Attanasio & Valerie 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.
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  6. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-467, June.
  7. 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.
  8. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
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  10. H. M. Shefrin & Richard Thaler, 1977. "An Economic Theory of Self-Control," NBER Working Papers 0208, National Bureau of Economic Research, Inc.
  11. M. Browning & P. A. Chiappori, 1998. "Efficient Intra-Household Allocations: A General Characterization and Empirical Tests," Econometrica, Econometric Society, vol. 66(6), pages 1241-1278, November.
  12. 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.
  13. 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).
  14. Benno Torgler, 2002. "Does Culture Matter? Tax Morale in East-West-German Comparison," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 59(4), pages 504-504, December.
  15. repec:adr:anecst:y:1993:i:29 is not listed on IDEAS
  16. Manser, Marilyn & Brown, Murray, 1980. "Marriage and Household Decision-Making: A Bargaining Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 31-44, February.
  17. Lundberg, S. & Pollak, R.A., 1991. "Separate Spheres Bargaining and the Marriage Market," Discussion Papers in Economics at the University of Washington 91-08, Department of Economics at the University of Washington.
  18. repec:adr:anecst:y:1993:i:29:p:07 is not listed on IDEAS
  19. 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.
  20. 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.
  21. 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(4), pages 1245-1266, December.
  22. Jennifer L. Romich & Thomas Weisner, 2000. "How Families View and Use the EITC: Advanced Payment versus Lump-sum Delivery," JCPR Working Papers 138, Northwestern University/University of Chicago Joint Center for Poverty Research.
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