Individual welfare analysis for collective households
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Individual welfare analysis for collective households. / Cherchye, Laurens; Cosaert, Sam; De Rock, Bram; Kerstens, Pieter Jan; Vermeulen, Frederic.
In: Journal of Public Economics, Vol. 166, 2018, p. 98-114.Research output: Contribution to journal › Journal article › Research › peer-review
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TY - JOUR
T1 - Individual welfare analysis for collective households
AU - Cherchye, Laurens
AU - Cosaert, Sam
AU - De Rock, Bram
AU - Kerstens, Pieter Jan
AU - Vermeulen, Frederic
PY - 2018
Y1 - 2018
N2 - We propose novel tools for the analysis of individual welfare on the basis of aggregate household demand behavior. The method assumes a collective model of household consumption with the public and private nature of goods specified by the empirical analyst. A main distinguishing feature of our approach is that it builds on a revealed preference characterization of the collective model that is intrinsically nonparametric. We show how to identify individual money metric welfare indices from observed household demand, along with the intrahousehold sharing rule and the individuals’ willingness-to-pay for public consumption (i.e. Lindahl prices). The method is easy to use in practice and yields informative empirical results, which we demonstrate through both a simulation exercise and an empirical application to labor supply data drawn from the Panel Study of Income Dynamics.
AB - We propose novel tools for the analysis of individual welfare on the basis of aggregate household demand behavior. The method assumes a collective model of household consumption with the public and private nature of goods specified by the empirical analyst. A main distinguishing feature of our approach is that it builds on a revealed preference characterization of the collective model that is intrinsically nonparametric. We show how to identify individual money metric welfare indices from observed household demand, along with the intrahousehold sharing rule and the individuals’ willingness-to-pay for public consumption (i.e. Lindahl prices). The method is easy to use in practice and yields informative empirical results, which we demonstrate through both a simulation exercise and an empirical application to labor supply data drawn from the Panel Study of Income Dynamics.
KW - Collective model
KW - Identification
KW - Individual welfare
KW - Labor supply
KW - Money metric welfare index
KW - Revealed preferences
KW - Sharing rule
U2 - 10.1016/j.jpubeco.2018.08.012
DO - 10.1016/j.jpubeco.2018.08.012
M3 - Journal article
AN - SCOPUS:85053310322
VL - 166
SP - 98
EP - 114
JO - Journal of Public Economics
JF - Journal of Public Economics
SN - 0047-2727
ER -
ID: 202938057