Estimation of the Sharing Rule between Adults and Children and Related Equivalence Scales within a Collective Consumption Framework

Abstract

In order to determine how much money is needed to make each household member as well off as they were before a change in living conditions, equivalence scales should be defined on the basis of individual rather than household welfare. This requires the knowledge of individual utilities that are derivable from the identification of the rule governing the intra-household allocation of resources within a collective approach. We pursue this objective using information about male, female and children clothing expenditure present in the 1999 Italian Household budget survey within the estimation of a complete demand system. The sharing rule between adults and children is estimated using a structural rather than a reduced form approach. Maximum simulated likelihood is used to estimate a collective model of individual demand equations with zero expenditures for the exclusive good clothing. The recovery of individual utilities for adults and children permits the estimation of the cost of children taking the intra-household distribution of resources into account. We show that the cost of Italian children is significantly affected by the parents' aversion to intra-household inequality.

Gender inequalities among adults and children in collective households

“…In particular, the reference framework is that of collective consumption models, as proposed by Arias et al (2004), Menon et al (2017) and Caiumi and Perali (2014), but extended also to children as in Dunbar et al (2013) and Mangiavacchi et al (2014).…”

A Collective Household Labour Supply Model with Disability: Evidence from Iraq

“…One of the testable restrictions of the unitary model is the income pooling, which is a condition where the household resources, including the non-labour income, labour, capital, and land are pooled together. Earlier literature used collective models to examine the consumption allocation and to test the income pooling which was rejected in the majority of the studies (Attanasio and Lechene 2002;Arias et al 2004;Blundell at al. 2005Blundell at al.…”

The Collective Farm‐household Model: Policy and Welfare Simulations

“…2 Each individual has rational preferences over the private consumption of a composite market good c i ,leisurel i ,andthedomesticallyproducedgood z i . 3 Individual preferences are characterized by a strictly increasing and strictly quasi-concave utility function U i c i , l i , z i ; d i ,w he r ed i is a set of individual-specific observable characteristics affecting preferences directly. All members of the family allocate their total endowment of time T i to a marketable production activity, h i ,andanon-marketableproductionactivity ,t i .…”

“…The first order necessary conditions (FONCs) are w i − δ g t i = 0, for i = 1, 2, where δ is the Lagrange multiplier of the technology constraint in program (3).Giventhelevelofz,theoptimal amount of time spent by spouses in domestic chores t i is determined only by the individual marginal product of labor and production technology. The FONCs yield the optimal input de-…”

“…In general, superscript i indicates endogenous variables, while subscript i indicates exogenous variables 3. The study ignores both the presence of public goods and externalities within the family.…”