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OLS estimation of the intra-household distribution of expenditure

Author

Listed:
  • Valérie Lechene

    (Institute for Fiscal Studies and University College London)

  • Krishna Pendakur

    (Institute for Fiscal Studies and Simon Fraser University)

  • Alexander Wolf

    (Institute for Fiscal Studies and ECARES)

Abstract
Individuals may be poor even if their household is not poor, because the intra-household distribution of resources may be unequal. Dunbar, Lewbel and Pendakur (2013) develop a model wherein the resource share of each person in a collective household - defined as their share of total household expenditure - may be estimated via nonlinear estimation of Engel curves, which in practice can be difficult. In this paper, we provide a linear representation of their model, so that resource shares are revealed by estimated coefficients from OLS regressions using off-the-shelf consumer expenditure micro-data. We also provide a simple linear pre-test to check for model identification. We apply the model to data from 12 countries, and investigate resource shares, gender gaps in expenditure, and individual poverty. We find that equal sharing - the implicit assumption underlying household-level poverty calculations - is rejected. We also find evidence of large gender gaps in resource shares, and consequently in poverty rates, in a few countries.

Suggested Citation

  • Valérie Lechene & Krishna Pendakur & Alexander Wolf, 2020. "OLS estimation of the intra-household distribution of expenditure," IFS Working Papers W20/6, Institute for Fiscal Studies.
    • Handle: RePEc:ifs:ifsewp:20/6
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    References listed on IDEAS

    as
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    Cited by:

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    3. Arthur Lewbel & Krishna Pendakur, 2024. "Estimating a model of inefficient cooperation and consumption in collective households," Review of Economics of the Household, Springer, vol. 22(3), pages 865-907, September.
    4. Almås, Ingvild & Ringdal, Charlotte & Hoem Sjursen, Ingrid, 2021. "Understanding inequality within households," GLO Discussion Paper Series 961, Global Labor Organization (GLO).
    5. Bose-Duker,Theophiline & Gaddis,Isis & Kilic,Talip & Lechene,Valérie & Pendakur,Krishna, 2021. "Diamonds in the Rough? : Repurposing Multi-Topic Surveys to Estimate Individual-Level Consumption Poverty," Policy Research Working Paper Series 9661, The World Bank.

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    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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