Sharing Rule Identification for General Collective Consumption Models
KU Leuven; Erasmus Research Institute of Management (ERIM)
Bram De Rock
Katholieke Universiteit Leuven - Campus Kortrijk (KULAK) - Subfaculty of Economics and Applied Economics
Boston College - Department of Economics
Tilburg University - CentER; Institute for the Study of Labor (IZA)
IZA Discussion Paper No. 6571
We propose a method to identify bounds (i.e. set identification) on the sharing rule for a general collective household consumption model. Unlike the effects of distribution factors, it is well known that the level of the sharing rule cannot be uniquely identified without strong assumptions on preferences across households of different compositions. Our new results show that, though not point identified without these assumptions, bounds on the sharing rule can still be obtained. We get these bounds by applying revealed preference restrictions implied by the collective model to the household's continuous aggregate demand functions. We obtain informative bounds even if nothing is known about whether each good is public, private, or assignable within the household, though having such information tightens the bounds. An empirical application demonstrates the practical usefulness of our method.
Number of Pages in PDF File: 32
Keywords: collective model, consumer demand, revealed preferences, sharing rule, identification, bounds
JEL Classification: D11, D12, D13, C14, C30working papers series
Date posted: May 26, 2012
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