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Household Consumption When the Marriage Is Stable

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  • Cherchye, Laurens

    (KU Leuven)

  • Demuynck, Thomas

    (Université Libre de Bruxelles)

  • 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 of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp8070
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    More about this item

    Keywords

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

    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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