Pierre André Chiappori (Columbia) "Family Economics" - Cemmap

230 5. Empirical issues for the collective model
have clothing demands that depend on earnings. They find that for single
men and single women, earnings do not impact on clothing demand once
we take account of total expenditure. It is important to note that this
does not imply that clothing demand is separable from labor supply (it
is not) since they condition on both partners being in fulltime work and
effectively test for whether wages affect preferences. Given the finding for
singles, relative earnings are a reasonable candidate for being a distribution
factor for couples. As discussed in section 5.2 we cannot generally identify
the location of the sharing rule, so Browning et al simply set it equal to
one half (at the median of total expenditure) if the two partners have
the same age and earnings. They find that differences in earnings have a
highly significant but quantitatively small impact on sharing: going from
the wife having 25% of total earnings to 75% of total earnings shifts the
sharing rule by 2.3 percentage points. Differences in age are similar with
significant but small effects: going from being 10 years younger than her
husband to being 10 years older raises the wife’s share by two percentage
points. Conversely, total expenditure (taken as a proxy for lifetime wealth)
is less statistically significant but with a large effect: a 60% increase in total
expenditure increases the wife’s share by 12%. This suggests that wives in
high wealth households have a higher share of nondurable expenditure.
Browning and Bonke (2009) use a supplement to the Danish Household
Expenditure Surveys for 1999 to 2005. This supplement (designed by the
authors) takes the form of respondents recording for every expenditure in a
conventional expenditure diary for whom the item was bought: ‘mainly for
the household’, ‘for the husband’, ‘for the wife’, ‘for the children’ and ‘outside
the household’. This is the firsttimethatsuchinformationhasbeen
collected in a representative survey in a high income country. Another notable
feature of these data is that they contain a richer set of potential
distribution factors than most expenditure data sets. For example, questions
were asked on the length of the current partnership; the labor force
participation of the mothers of the husband and wife when they were 14
and the marital and fertility histories of the two partners. Since all expenditures
are allocated in these data, a sharing rule can be constructed for each
household. This allows for the identification of the location of the sharing
rule as well as its dependence on distribution factors. These authors find
that the mean of the sharing rule is very close to one half (at the mean
of the data). 15 This equality of the mean total expenditures for the two
partners masks that the sharing rule in different households varies widely.
For example the first and third quantiles for the wife’s share are 0.31 and
0.68 so that close to half of households have one partner receiving twice as
15 This equality of total assigned expenditures is not reflected in the expenditures on
individual goods. For example, the individual allocations show that, in mean, wives
spend more on clothing but less on alcohol and tobacco than their husbands.