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Intrahousehold Economies of Scale with Application to Food Assistance and Work Incentive Programs

Wenying Li and Jeffrey Dorfman ()

American Journal of Agricultural Economics, 2021, vol. 103, issue 4, 1251-1267

Abstract: Comparing income levels across families with different household compositions and sizes is not easy and has been a long‐term focus in welfare and policy analysis. This paper evaluates the extent childless two‐person households in the U.S. reduce their costs by living together relative to living alone. Using a structural collective household model and household scanner data, we find women, on average, consume 48% of total household expenditures, and a woman (man) living alone would need approximately 65% (63%) of the two‐person household's income to reach the same living standard as attained as a member of a two‐person household. Our results suggest the poverty line for two‐person childless households may need to be increased, whereas other federal benefit calculations are overly generous.

Date: 2021
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Handle: RePEc:wly:ajagec:v:103:y:2021:i:4:p:1251-1267