Collective Household Welfare and Intra-household Inequality

Jean-Paul Chavas (), Martina Menon, Elisa Pagani and Federico Perali

CHILD Working Papers Series from Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA

Abstract: We investigate the relationship between the individual and household indirect utility functions in the context of a collective household model. Our analysis produces new results that explain how the rule governing the distribution of resources among household members is related to the measurement of household welfare and intra-household inequality. We show that in a collective model of private consumption, income shares are equal to the product of two weights: the Pareto weight and a distribution weight reflecting income effects across individuals. For a weighted Bergsonian representation of household utility and general assumptions about individual preferences, we derive the associated household welfare functions and intra-household inequality measures belonging to a family of entropy indexes. We illustrate our findings with an empirical application that estimates a collective demand system to recover associated individual and household welfare functions along with the measures of intra-household inequality. This is the first application that estimates the Pareto weight and examines its role within a measure of income dispersion among household members.

Keywords: Collective household model; Sharing rule; Household welfare; Intra-household inequality; Theil index. (search for similar items in EconPapers)
Pages: 45 pages
Date: 2017
New Economics Papers: this item is included in nep-dem and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:cca:wchild:56

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