DP15955 OLS Estimation of the Intra-Household Distribution of Expenditure

Author(s): Valérie Lechene, Krishna Pendakur, Alexander Wolf
Publication Date: March 2021
Keyword(s): collective households, intra-household inequality, poverty, resource shares
JEL(s): D13, D63, I32
Programme Areas: Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=15955

We develop a method to estimate resource shares - the fraction of total household expenditure allocated to each household member - using OLS estimation of Engel curves. The method reframes the nonlinear model of Dunbar, Lewbel and Pendakur (2013), extended to allow single parent households, scale economies in assignable goods, complementarities between non assignable goods, and supplemented by a linear identification test. We apply the model to data from 12 countries, and investigate resource shares, gender gaps, and poverty. We reject equal sharing, and find large gender gaps in resource shares, and consequently in poverty rates, in some countries.