Macro Lunch - Mery Ferrando

December 12, 2017

12:45 - 2:00pm


D 350, Place Montesquieu 3

Mery Ferrando

(UCLouvain, CORE)

will give a presentation on

Intra-household allocation with public goods

Abstract: Collective models of household behavior usually assume economies of scale within the household can be described by means of Barten scales. This implies that individual marginal willingness to pay for shared consumption is equal for each member of the household. In this paper, I model shared consumption as a public good, which allows individual marginal willing to pay for the public good to differ. I provide a flexible parametric estimation of a model with both private and public goods. The model is estimated on a new dataset of Belgian households, which contains detailed information on individual private and public consumption. Results show that this alternative modeling approach has important effects on the value of individual income. Given the significant lower marginal willingness to pay for the public good among wives, their individual income is significantly lower than in the standard approach. This translates into a higher level of poverty, specially among women, and a higher inequality relative to a model with shared consumption with equal shadow prices.

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