Consumption Inequality and Intra-Household Allocations

By Jeremy Lise, S. Seitz. 2007

327 citations recorded by the source corpus.

The current literature on consumption inequality treats all adults within the household equally, making the implicit assumption that all consumption inequality is between, not within, households. However, increased marital sorting on earnings and the subsequent rise in the share of women's income in the household may have important implications for consumption inequality measured at the individual level. We use an extension of the collective framework of Chiappori to estimate a rule for assigning resources to individual household members. We then construct a measure of individual level inequality by looking at implied changes in intra-household allocations and explore the implications of our framework for the measurement of individual level, versus household level, consumption inequality. Our analysis, which is based on households comprising one or two adults, suggests that the conventional approach of ignoring intra-household allocations underestimates the level of cross-sectional consumption inequality by 30% and overstates the trend by two-thirds. Our findings also indicate that increases in marital sorting on wages and hours worked can simultaneously explain virtually all of the decline in within household inequality and a substantial fraction of the rise in between household inequality in the UK since the 1970s.

Subfields: Finance, Gender Studies, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/a2a52e2e75c6105b65b03fdbb582e10cfba89382

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Citations in the corpus

Time allocation within the family: welfare implications of life in a couple (2007, unknown): “This type of assumption has been used so far in cross-section data (Laisney, 2002; Browning, Chiappori and Lewbel, 2003; Lise and Seitz, 2004; Vermeulen, 2005).”
Household Sharing and Commitment: Evidence from Panel Data on Individual Expenditures and Time Use (2014, background): “See Lise and Seitz (2011), Figure 10 for a similar object calculated for the United Kingdom.”
Joint-Search Theory: New Opportunities and New Frictions (2009, background): “rΩ (w1, a) = max c {u (c) + Ωa (w1, a) (ra+ w1 + b− c)} (25)”
Children's Resources in Collective Households: Identification, Estimation and an Application to Child Poverty in Malawi (2013, background): “Lise and Seitz (2004) and BCL do not require this restriction for identification, but they both impose it in their empirical work.”
Moving Back Home: Insurance against Labor Market Risk (2012, background): “(46)The framework of (Lise and Seitz, 2004) is one that could be incorporated into the model analyzed here to study such e¤ects.”
Estimation of collective household models with Engel curves (2008, unknown): “The model we actually estimate is then obtained by substituting equation (16) into (11) and (17) into (12) for singles, and substituting equations (19), (20), (21), and (22) into equation (18) for couples.”
Estimating Consumption Economies of Scale, Adult Equivalence Scales, and Household Bargaining Power (2003, background): “The sense in which these identification results are generic is that identification could fail to hold, but only when the true functional forms for demand equations are too simple, thereby causing too many of these equations (equation (35) in the appendix for t = 1, .”