Estimation of Collective Household Models With Engel Curves

Arthur Lewbel () and Krishna Pendakur

No 694, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: The structural consumer demand methods used to estimate the parameters of collective household models are typically either very restrictive and easy to implement or very general and difficult to estimate. In this paper, we provide a middle ground. We adapt the very general framework of Browning, Chiappori and Lewbel (2007) by adding a simple restriction that recasts the empirical model from a highly nonlinear demand system with price variation to a slightly nonlinear Engel curve system. Our restriction has an interpretation in terms of the behaviour of household scale economies and is testable. Our method identifies the levels of (not just changes in) household resource shares, and a variant of equivalence scales called indifference scales. We apply our methodology to Canadian expenditure data.

Keywords: Consumer Demand; Collective Model; Sharing rule; Household Bargaining; Bargaining Power; Indifference Scales; Adult Equivalence Scales; Demand Systems; Barten Scales; Nonparametric Identification. (search for similar items in EconPapers)
JEL-codes: D12 D11 C30 I31 J12 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ecm
Date: 2008-05-01
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Journal Article: Estimation of collective household models with Engel curves (2008)
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