Marital matching, economies of scale and intrahousehold allocations

Laurens Cherchye, Bram De Rock, Khushboo Surana and Frederic Vermeulen

No 551159, Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven

Abstract: We propose a novel structural method to empirically identify economies of scale in household consumption. We assume collective households with consumption technologies that define the public and private nature of expenditures through Barten scales. Our method recovers the technology by solely exploiting preference information revealed by households’ consumption behavior. The method imposes no parametric structure on household decision processes, accounts for unobserved preference heterogeneity across individuals in different households, and requires only a single consumption observation per household. Our main identifying assumption is that the observed marital matchings are stable. We apply our method to data drawn from the US Panel Study of Income Dynamics (PSID), for which we assume that similar households (in terms of observed characteristics like age or region of residence) operate on the same marriage market and are characterized by a homogeneous consumption technology. This application shows that our method yields informative results on the nature of scale economies and intrahousehold allocation patterns. In addition, it allows us to de.ne individual compensation schemes required to preserve the same consumption level in case of marriage dissolution or spousal death.

Date: 2016-09
Note: paper number DPS 16.23
References: Add references at CitEc
Citations:

Published in Department of Economics. Discussion paper series,, pages 1-39

Downloads: (external link)
https://lirias.kuleuven.be/retrieve/478330 (application/pdf)

Related works:
Journal Article: Marital Matching, Economies of Scale, and Intrahousehold Allocations (2020)
Working Paper: Marital Matching, Economies of Scale and Intrahousehold Allocations (2016)
Working Paper: Marital Matching, Economies of Scale and Intrahousehold Allocations (2016)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ete:ceswps:551159

Access Statistics for this paper

More papers in Working Papers of Department of Economics, Leuven from KU Leuven, Faculty of Economics and Business (FEB), Department of Economics, Leuven
Bibliographic data for series maintained by library EBIB ().