2017
DOI: 10.1257/jel.20150715
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Static and Intertemporal Household Decisions

Abstract: We discuss the most popular static and dynamic models of household behavior. Our main objective is to explain which aspects of household decisions different models can account for. Using this insight, we describe testable implications, identification results, and estimation findings obtained in the literature. Particular attention is given to the ability of different models to answer various types of policy questions.

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Cited by 154 publications
(108 citation statements)
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References 118 publications
(175 reference statements)
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“…Finally, Ábrahám and Cárceles-Poveda (2006) introduce public capital and derive the recursive form of the problem, similar to ours, but then they focus on the decentralization of the constrained-optimal allocation as a competitive Our analysis with two agents is particularly relevant for applications where risk sharing is studied within a household, between 'husband' and 'wife.' In a recent survey, Chiappori and Mazzocco (2015) consider the LC model, possibly with household savings, as the most powerful model both to explain the intra-household allocation of consumption and leisure, and to study normative questions such as joint taxation of household income and assets.…”
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confidence: 99%
“…Finally, Ábrahám and Cárceles-Poveda (2006) introduce public capital and derive the recursive form of the problem, similar to ours, but then they focus on the decentralization of the constrained-optimal allocation as a competitive Our analysis with two agents is particularly relevant for applications where risk sharing is studied within a household, between 'husband' and 'wife.' In a recent survey, Chiappori and Mazzocco (2015) consider the LC model, possibly with household savings, as the most powerful model both to explain the intra-household allocation of consumption and leisure, and to study normative questions such as joint taxation of household income and assets.…”
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confidence: 99%
“…Although collective bargaining models are more general than unitary models, we consider the unitary model a reasonable choice for the purpose of our paper for two reasons. One is multiple equilibria problems in that under collective bargaining models, μ is not set to a specific number; rather, it is bounded by the husband's and wife's outside options (see Chiappori and Mazzocco forthcoming). Model implications are complicated to draw with multiple equilibria.…”
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confidence: 99%
“…Arguably, important complications would arise from doing so: (i) total expenditure would be replaced by a full income that includes the value of leisure, the price of which is not necessarily the market wage (if one spouse is not working on the market); (ii) both the sharing rule and scale economies would now apply to both goods and time consumption, so that their interpretation (as much as that of indifference scales) would change; (iii) modelling non-participation would bring additional difficulties, as it would require an additional equation that may incorporate both the choice of not working on the market and the risk of rationing. Second, the simultaneous occurrence of within-household redistribution and risk-coping mechanisms (like added workers) reopens the question of the (possibly limited) insurance role of the house-hold as well as the representation of the household to be adopted in models with adverse shocks (see Chiappori and Mazzocco (2016)). Third, a related issue is the possibility of increased divorce following the relative improvement of women's economic opportunities.…”
Section: Resultsmentioning
confidence: 99%