The Economies of Scale of Living Together and How They are Shared: Estimates Based on a Collective Household Model

27 Pages Posted: 4 Aug 2009

See all articles by Aline Bütikofer

Aline Bütikofer

University of Bern

Michael Gerfin

University of Bern; IZA Institute of Labor Economics

Abstract

How large are the economies of scale of living together? And how do partners share their resources? The first question is usually answered by equivalence scales. Traditional estimation and application of equivalence scales assumes equal sharing of income within the household. This paper uses data on financial satisfaction to simultaneously estimate the sharing rule and the economy of scale parameter in a collective household model. The estimates indicate substantial scale economies of living together, especially for couples who have lived together for some time. On average, wives receive almost 50% of household resources, but there is heterogeneity with respect to the wives' contribution to household income and the duration of the relationship.

Keywords: collective household models, sharing rule, equivalence scale, subjective data

JEL Classification: D12, C21, D19

Suggested Citation

Bütikofer, Aline and Gerfin, Michael, The Economies of Scale of Living Together and How They are Shared: Estimates Based on a Collective Household Model. IZA Discussion Paper No. 4327, Available at SSRN: https://ssrn.com/abstract=1442642

Aline Bütikofer (Contact Author)

University of Bern ( email )

Gesellschaftsstrasse 49
Bern, BERN 3001
Switzerland

Michael Gerfin

University of Bern ( email )

CH-3012 Bern
Switzerland
+41 31 631 4092 (Phone)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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