Ordinary Least Squares Estimation of the Intrahousehold Distribution of Expenditure

Valérie Lechene, Krishna Pendakur and Alexander Wolf

Journal of Political Economy, 2022, vol. 130, issue 3, 681 - 731

Abstract: We provide a method to estimate resource shares—the fraction of total household expenditure allocated to each household member—using linear (e.g., ordinary least squares) estimation of Engel curves. The method is a linear reframing of the 2013 nonlinear model of Dunbar, Lewbel, and Pendakur, extended to allow single-parent and other complex households, scale economies in assignable goods, and complementarities between nonassignable goods and supplemented with a linear identification test. We apply the model to data from 12 countries and investigate resource shares, gender gaps, and poverty at the individual level. We reject equal sharing and find large gender gaps in resource shares, and consequently in poverty rates, in some countries.

Date: 2022
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