Ties that Bind: The Kin System as a Mechanism of Income-Hiding between Spouses in Rural Ghana

UNU-WIDER Working Paper

53 Pages Posted: 2 Feb 2012  

Carolina Castilla

Colgate University - Department of Economics

Date Written: January 31, 2012

Abstract

I present a model of intra-household allocation to show that when income is not perfectly observed by both spouses, hiding of income can occur even when revelation increases bargaining power. I draw data from Ghana and exploit the variation in the degree of asymmetric information between spouses, measured as the difference between the husband’s own reporting of farm sales and the wife’s reporting of his farm sales, to test whether the allocation of resources is consistent with hiding. Findings indicate that allocations are suggestive of men hiding farm sales income in the form of gifts to extended family members. The wife’s response is also suggestive of hiding. As information asymmetries increase, she reduces her expenditure in non-essential items, such as prepared foods and oil, but increases personal spending. Expenditure in oil is one of the main sources of calories among poor households in the region.

Keywords: incomplete information, income hiding, non-cooperative family bargaining

JEL Classification: D13, D82, J12

Suggested Citation

Castilla, Carolina, Ties that Bind: The Kin System as a Mechanism of Income-Hiding between Spouses in Rural Ghana (January 31, 2012). UNU-WIDER Working Paper . Available at SSRN: https://ssrn.com/abstract=1996882 or http://dx.doi.org/10.2139/ssrn.1996882

Carolina Castilla (Contact Author)

Colgate University - Department of Economics ( email )

13 Oak Drive
Hamilton, NY 13346
United States

Paper statistics

Downloads
33
Abstract Views
291