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Marital Matching, Economies of Scale, and Intrahousehold Allocations

Laurens Cherchye¹; Bram De Rock²; Khushboo Surana³; Frederic Vermeulen¹

¹ University of Leuven · ² ECARES, Université de Bruxelles, and University of Leuven · ³ University of York

We propose a novel nonparametric method to empirically identify economies of scale in multiperson household consumption. We assume consumption technologies that define the public and private nature of expenditures through Barten scales. Our method (solely) exploits preference information revealed by a cross-section of household observations while accounting for fully unobserved preference heterogeneity. An application to data drawn from the US Panel Study of Income Dynamics shows that the method yields informative results on scale economies and intrahousehold allocation patterns. In addition, it allows us to define individual compensation schemes required to preserve the same consumption level in case of marriage dissolution or spousal death.

DOI

10.1162/rest_a_00829

Volume

102 (4)

Pages

823-837

Language

en

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