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

Utilities
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8. Sharing the gains from marriage 377
2.2 2.4 2.6 2.8 3.0 3.2 3.4 3.6 3.8 4.0 4.2 4.4
FIGURE 8.10. Impact of a Rightwards Shift in Female Income Distribution on
Public Consumption and the Husband’s Private Consumption
changes affecting the wife’s situation do affect the structure of consumption;
moreover, improving the wife’s status boost public spending within
the couples - a fact that has been abundantly confirmed by empirical investigation,
especially if we think of children as a primary example of public
consumption (see Chapter 5).
8.4 Matching by Categories
The matching model and the associated allocation rules that we have discussed
so far assume some idealized conditions that are not likely to hold
in practice. The most common way to make the model more applicable
is to introduce frictions and some bargaining over the resulting surplus.
There is, however, an alternative modeling choice that goes part of the
way towards reality and is based on the recognition that the researcher
observes only part of the data that motivates and restricts choices. This
is particularly true in marriage markets where explicit market prices do
not exist and the division within families of consumption or time is rarely
observed. This path has been followed by Choo and Siow (2008) and Chiappori,
Salanié and Weiss (2010); the presentation given here follows the
latter contribution.
To incorporate unobserved heterogeneity, we consider a case in which
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