Household Consumption When the Marriage is Stable

27 Pages Posted: 5 Apr 2014

See all articles by L. Cherchye

L. Cherchye

KU Leuven; Erasmus Research Institute of Management (ERIM)

Thomas Demuynck

Catholic University of Leuven (KUL) - Faculty of Business and Economics (FBE)

Bram de Rock

Katholieke Universiteit Leuven - Campus Kortrijk (KULAK) - Subfaculty of Economics and Applied Economics

Frederic Vermeulen

Tilburg University - CentER; IZA Institute of Labor Economics

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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.

Keywords: marriage market, stable matching, Pareto efficient household consumption, testable implications, sharing rule identification, preference heterogeneity

JEL Classification: C14, D11, C78

Suggested Citation

Cherchye, Laurens and Demuynck, Thomas and de Rock, Bram and Vermeulen, Frederic, Household Consumption When the Marriage is Stable. IZA Discussion Paper No. 8070, Available at SSRN: https://ssrn.com/abstract=2420715

Laurens Cherchye (Contact Author)

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant
Belgium

Erasmus Research Institute of Management (ERIM)

P.O. Box 1738
3000 DR Rotterdam
Netherlands

Thomas Demuynck

Catholic University of Leuven (KUL) - Faculty of Business and Economics (FBE) ( email )

Naamsestraat 69
Leuven, B-3000
Belgium

Bram De Rock

Katholieke Universiteit Leuven - Campus Kortrijk (KULAK) - Subfaculty of Economics and Applied Economics ( email )

Etienne Sabbelaan 53
Kortrijk, B-8500
Belgium

Frederic Vermeulen

Tilburg University - CentER ( email )

P.O. Box 90153
5000 LE Tilburg
Netherlands
+31 13 466 3196 (Phone)

HOME PAGE: http://center.uvt.nl/staff/vermeulen/

IZA Institute of Labor Economics

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

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