Kinky choices, dictators and split might: A non-cooperative model for household consumption and labor supply

J. Boone, K. van der Wiel, A.H.O. van Soest, F.M.P. Vermeulen

Research output: Contribution to journalArticleScientificpeer-review

3 Citations (Scopus)

Abstract

We model consumption and labor supply behavior of a couple in a non-cooperative setting. Using minimal assumptions, we prove that demand for public goods is characterized by three regimes. It is either determined by the preferences of one of the partners only (Husband Dictatorship or Wife Dictatorship), or by both spouses’ preferences, in which case each partner’s influence depends on the relative wage rates (Split Might). The model is illustrated empirically using a sample drawn from the Consumer Expenditure Survey (CEX) where expenditures on children’s goods are a public good in both spouses’ preferences. It turns out that the spending pattern reflects the husband’s preferences in about 54% of the couples in our sample. Still, in about 45% of the households, the wife acts as a dictator. Somewhat less than 1% of the couples is characterized by a split might regime.
Original languageEnglish
Pages (from-to)1-19
JournalIZA Journal of Labor Economics
Volume3
Issue number11
DOIs
Publication statusPublished - Nov 2014

Keywords

  • consumption
  • labor supply
  • intra-household allocation
  • non-cooperative model
  • public goods

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