out of the wallet and into the purse using micro data to test income pooling this paper uses an exogenous change in the intrahousehold distribution of income provided by a change in united kingdom family allowance policy to test the income pooling hypothesis implied by unitary household models expenditure shares are estimated for a wide range of goods using household level data shifts in expenditure shares suggest that children and mothers benefited at the expense of fathers when this policy change shifted income within households from men to women similar shifts are not found among married couple households with no children this paper refutes income pooling and confirms and extends results in lundberg pollak and wales 1997

optimal production management when demand depends on the business cycle we assume that the cumulative consumer demand for an item follows a brownian motion with both the drift and the variance parameters modulated by a continuous time markov chain that represents the regime of the economy the management of the company would like to maintain the inventory level as close as possible to a target inventory level and would also like to produce at a rate that is as close as possible to a target production rate the company is penalized for deviations from the target levels and the objective is to minimize the total discounted penalty costs we consider two models in the first model the management of the company knows the state of the economy whereas in the second model the management does not know it we solve both problems and obtain the optimal production policy and the minimal total expected discounted cost furthermore we compare the total expected discounted costs of the two models and determine the value of knowing the regime of the economy we also solve the above prob

domestic violence a nonrandom affair in this paper we develop and estimate a model of domestic violence we extend a noncooperative model of the family to include violence as a source of gratification and an instrument for controlling behavior we estimate the model by robust methods since the violence process appears to have a heavy tailed nonnormal error distribution we find that the properties of the equilibria depend on family income for low middle income families our results indicate an equilibrium in which one person s reservation utility constraint is binding whereas for higher income families both individuals may gain from the relationship

computing multi period information constrained optima this paper presents a detailed theoretical derivation and justification for methods used to compute solutions to a multi period including infinite period continuum agent unobservedeffort economy actual solutions are displayed illustrating cross sectional variability in consumption and labour effort in the population at a point in time and variability for a typical individual over time the optimal tradeoff between insurance and incentives is explored and the issue of excess variability is addressed by consideration of the analogue full information economy and various restricted contracting regimes

labor market opportunities and women s decision making power within households abstract despite the perceived importance of labor market opportunities in shaping married women s outside option and their bargaining power within households as a result this link has received very little empirical attention using longitudinal data on who makes the decision on a wide range of issues within mexican households and data from the administrative records of the mexican social security institute this paper identifies the effects of relative changes in labor market opportunities for men and women on both working and non working women s decision making power i find that increases in labor market opportunities improve women s decision making power as well as children s health using differential labor demand shocks across mexican industries caused by china s admission to the wto gives similar results

control and ownership of assets within rural ethiopian households this article investigates how the control and devolution of productive assets are allocated among husband and wife theory predicts that bargaining power within marriage depends on the division of assets upon divorce and on control over assets during marriage using detailed household data from rural ethiopia we show that assets brought to marriage ownership of assets control within marriage and disposition upon death or divorce are only partly related productive resources are controlled by the household head disposition upon death or divorce only loosely depends on individual ownership during marriage but control is associated with larger claims upon divorce assets brought into marriage have little impact on disposition upon death but matter in case of divorce

improving child welfare in middle income countries the unintended consequence of a pro homemaker divorce law and wait time to divorce abstract this study identifies the impact of access to and the speed of divorce on the welfare of children in a middle income largely catholic country using difference in difference estimation techniques i compare school enrollment for children of married and cohabiting parent households before and after the legalization of divorce implementing pro homemaker divorce laws increased school enrollment anywhere from 3 4 to 5 5 percentage points and the effect was particularly salient on secondary school students i provide evidence that administrative processes influencing the speed of divorce affect household bargaining and investments in schooling with every additional six months wait to the finalization of divorce school enrollment decreased by approximately one percentage point the impact almost doubles for secondary schooling when contemplating development policies advocates policymakers and leaders should not overlook the impact changes in family policies and administrative processes can have on advancements in child welfare and ultimately economic development jel d12 d13 j12 i21 i25

reputation in long run relationships we model a long run relationship as an infinitely repeated game played by two equally patient agents in each period the agents play an extensive form stage game of perfect information with either locally non conflicting interests or strictly conflicting interests there is incomplete information about the type of player 1 while player 2 s type is commonly known we show that a sufficiently patient player 1 can leverage player 2 s uncertainty about his type to secure his highest pay off compatible with player 2 s individual rationality in any perfect bayesian equilibrium of the repeated game copyright 2012 oxford university press

bargaining and distribution in marriage the standard economic model of the family is a common preference model that assumes that a family maximizes a single utility function and implies that family behavior is independent of which individuals receive income or control resources in recent years this model has been challenged by game theoretic models of marriage that do not impose pooling and are therefore consistent with empirical evidence that income controlled by husbands and wives does have different effects on family behavior in this paper the authors review a number of simple bargaining models and relevant empirical evidence and discuss their implications for distribution within marriage

marriage specialization and the gender division of labor we consider why the gender division of labor is so often enforced by custom and why customary gender divisions of labor generally involve both direction and prohibition in our formal model agents first learn skills and then enter the marriage market we show that wasteful behavior may emerge due to strategic incentives in specialization choice and human capital acquisition and that both problems may be mitigated through a customary gender division of labor this division is not pareto improving both the distributional effects and welfare gains of a customary gender division of labor decrease as opportunities for market exchange increase

bargaining in the shadow of the law divorce laws and family distress this paper exploits the variation occurring from the different timing of divorce law reforms across the united states to evaluate how unilateral divorce changed family violence and whether the option provided by unilateral divorce reduced suicide and spousal homicide unilateral divorce both potentially increases the likelihood that a domestic violence relationship ends and acts to transfer bargaining power toward the abused thereby potentially stopping the abuse in extant relationships in states that introduced unilateral divorce we find a 8 16 percent decline in female suicide roughly a 30 percent decline in domestic violence for both men and women and a 10 percent decline in females murdered by their partners

gender and say a model of household behaviour with endogenously determined balance of power the evidence that the same total income can lead a household to choose different consumption vectors depending on who brings in how much of the income has led to an effort to replace the standard unitary model of the household with the collective model which recognizes that the husband and the wife may have different preferences and depending on the balance of power between them the household may choose differently one weakness of this new literature is that it fails to recognize that the household s choice could in turn influence the balance of power once this two way relation between choice and power is recognized we are forced to confront some new questions concerning how to model the household this paper tries to answer these by defining a household equilibrium examining its game theoretic properties and drawing out its testable implications it is shown for instance that once we allow for dynamic interaction a household can exhibit inefficient behavior and that for a certain class of parameters children will be less likely to work in a household where power is evenly balanced than one in which all power is concentrated in the hands of either the father or the mother the paper also draws out the implications for female labor supply

changes in the labor supply behavior of married women 1980 2000 using march current population survey data we investigate married women s labor supply from 1980 to 2000 we find a large rightward shift in their labor supply function for annual hours in the 1980s with little shift in the 1990s these shifts account for most of the slowdown in the growth of labor supply during this period a major development was the dramatic decrease in the responsiveness of married women s labor supply to their own and husbands wages their own wage elasticity fell by 50 56 while their cross wage elasticity fell by 38 47 in absolute value

the effect of wealth on individual and household labor supply evidence from swedish lotteries abstract we study the effect of wealth on labor supply using the randomized assignment of monetary prizes in a large sample of swedish lottery players winning a lottery prize modestly reduces earnings with the reduction being immediate persistent and quite similar by age education and sex a calibrated dynamic model implies lifetime marginal propensities to earn out of unearned income from 0 17 at age 20 to 0 04 at age 60 and labor supply elasticities in the lower range of previously reported estimates the earnings response is stronger for winners than their spouses which is inconsistent with unitary household labor supply models jel d14 j22 j31

mine yours or ours the efficiency of household investment decisions an experimental approach we conduct an experiment to measure the relative importance of key factors that influence the efficiency of household investment decisions we find that both for men and women their spouse s access to information does not affect efficiency however they are willing to sacrifice much efficiency for greater personal control over household income intriguingly even when spouses control over household income is exogenously assigned inefficiency persists as a wife s assigned share increases husbands undercut their own income to reduce hers this self destructive and spiteful behavior is best explained by non economic factors such as identity seldom emphasized in mainstream household economic models

optimal central bank intervention in the foreign exchange market abstract we consider a currency with exchange rate dynamics modeled as a geometric brownian motion the objective of the central bank is to keep this exchange rate as close as possible to a given target so there is a running cost associated to the difference between the exchange rate and the target additionally there are also fixed and proportional costs associated with each intervention the objective of this paper is to find the optimal level of intervention and the optimal sizes of the interventions so as to minimize the total cost we solve this problem by applying the theory of stochastic impulse controls journal of economic literature classification numbers c61 d81 f31 g15

noncooperative bargaining models of marriage in this paper we discuss some simple noncooperative models of distribution within marriage in which the equilibria are not necessarily pareto optimal in which history and culture can affect which equilibrium is realized and in which distribution may depend on whether resources are controlled by the husband or by the wife recent moves away from single decision maker models of the family have permitted economists to address distribution within marriage and cooperative bargaining models have played the central role in these moves the next step is to permit strategic interaction between family members by modeling distribution within marriage as a noncooperative game noncooperative game theory allows great flexibility in specifying the rules of the game and unlike cooperative game theory imposes few a priori restrictions on the nature of equilibrium outcomes in particular noncooperative models neither assume nor imply that all equilibria are pareto optimal

human capital true love and gender roles is sex destiny abstract we assume optimal specialization in the nuclear family involves one partner doing homework and the other wagework basic human capital for one or the other is imparted to individuals through early childhood training mates are chosen on the basis of noneconomic criteria true love because love strikes randomly after basic human capital is acquired a coordination problem arises in choosing complementary specializations even with no discrimination there exist equilibria characterized by gender roles perfect correlation between sex and family roles there may also exist other equilibria in which the correlation between sex and family roles is imperfect and individuals are trained by aptitude we rank the equilibria when they coexist and demonstrate that affirmative action policies can increase average welfare by eliminating some equilibria the analysis is conducted in a framework which characterizes individuals by training by aptitude and by family role in a 2 2 2 model in this framework we formalize the equality of the sexes as well as the relative importance of nature versus nurture and various types of training

elderly care and intrafamily resource allocation when children migrate this paper considers the intrafamily allocation of elderly care in the context of international migration where migrant children may be able to provide financial assistance to their parents but are unable to offer physical care to investigate sibling interaction i estimate best response functions for individual physical and financial contributions as a function of siblings contributions after addressing the endogeneity of siblings contributions and selection into migration i find evidence that siblings financial contributions function as strategic complements while time contributions operate as strategic substitutes this suggests that contributions may be based on both strategic bequest and public good motivations

bargaining with grandma the impact of the south african pension on household decision making i examine how an exogenous change in individual income affects decision making in the household using the age discontinuity in eligibility for the south african pension i find that eligible women are 15 percentage points more likely to be the primary decision maker in the household than noneligible women this corresponds with a large increase in their share of household income there are no parallel effects for men due to labor force withdrawal male income does not increase with eligibility suggesting that their status in the household is unchanged

microfinance and gender empowerment in this paper we develop a theoretical model of household production bargaining and credit to analyse how access to microcredit affects intra household decision making and welfare and identify conditions under which female household members are most likely to benefit we show that consistent with ethnographic accounts of the impact of microcredit programmes on poor households access to loans can lead to a variety of outcomes for intra household decision making and welfare depending on initial conditions and that in some instances women borrowers may experience a decline in welfare we identify two instances in which a woman is most likely to benefit when there is scope for investing the loan profitably in a joint activity and when a large share of the household budget is devoted to household public goods

moral hazard optimal unemployment insurance and experience rating abstract this paper is concerned with evaluating alternative unemployment insurance ui schemes in a dynamic economy with moral hazard we consider changes in the size and duration of ui benefits and the effects of experience rating and use a dynamic contracting approach to determine a benchmark optimal allocation radical changes in the current ui system increase welfare but not by much a move to full experience rating has distributional effects but the aggregate effects are negligible

an analysis of out of wedlock childbearing in the united states this paper relates the erosion of the custom of shotgun marriage to the legalization of abortion and the increased availability of contraception to unmarried women in the united states the decline in shotgun marriage accounts for a significant fraction of the increase in out of wedlock first births several models illustrate the analogy between women who do not adopt either birth control or abortion and the hand loom weavers both victims of changing technology mechanisms causing female immiseration are modeled and historically described this technology shock hypothesis is an alternative to welfare and job shortage theories of the feminization of poverty excerpt

gender and poverty issues and policies with special reference to asian developing countries abstract recent years saw the outpouring of a theoretical and empirical literature exploring the nexus between gender and poverty in developing countries this paper which provides a critical review of the literature examines the conceptual basis for a gender focused approach to poverty alleviation reviews the relevant empirical studies and data drawn principally but not exclusively from asian developing countries and explores the role of public policies to redress gender disparity the present review argues that the conceptual basis for many gender focused policies is far from well established the empirical foundations of many conventional wisdoms as well as of popular policies remain fragile due to the dearth of reliable gender segregated data and rigorous empirical studies the paper underscores the need for more careful empirical analyses as an input to formulating sound public policy with regard to gender and poverty

gender agricultural production and the theory of the household virtually all models of the household assume that the allocation of resources is pareto efficient within many african households agricultural production occurs on many plots controlled by different members of the household pareto efficiency implies that factors should be allocated efficiently across these plots i find in contrast that plots controlled by women are farmed much less intensively than similar plots within the household controlled by men the estimates imply that about 6 percent of output is lost because of inefficient factor allocation within the household the paper suggests a new approach to modeling intrahousehold allocation consistent with the empirical results

testable restrictions of pareto optimal public good provision abstract this paper is a theoretical examination of the testable restrictions of pareto optimality in an economy with public goods in contrast to other methods for deriving tests for the optimality of public good provision ad hoc assumptions about individual public good demand are not required the testable restrictions derived in this paper are defined over a finite series of aggregate level data production data and individual after tax income despite the relatively sparse data requirements and the minimal assumptions about preferences and technology these restrictions are not vacuous thus they provide a strong theoretical basis for empirical work that tests the pareto optimality hypothesis in a broad variety of public good economies

spousal control and intra household decision making an experimental study in the philippines i elicit causal effects of spousal observability and communication on financial choices of married individuals in the philippines when choices are private men put money into their personal accounts when choices are observable men commit money to consumption for their own benefit when required to communicate men put money into their wives account these strong treatment effects on men but not women appear related more to control than to gender men whose wives control household savings respond more strongly to the treat ment and women whose husbands control savings exhibit the same response changes in information and communication interact with underlying control to produce mutable gender specific outcomes

layoff taxes and minimum wage two complementary public policies in a matching model in which the job destruction rate and the output are endogenous we show that the presence of a binding minimum wage prompts firms to choose too risky jobs introducing layoff taxes therefore reduces unemployment and improves market efficiency

on efficient distribution with private information this paper is a study of the dynamics of the efficient distribution of consumption in an exchange economy with many consumers each of whom is subject to private idiosyncratic taste shocks we propose a recursive method for finding feasible allocations that are incentivecompatible and that are pareto optimal within this set the method is applied to several parametric examples we find that in an efficient allocation the degree of inequality continually increases with a diminishing fraction of the population receiving an increasing fraction of the resources we discuss the extent to which these allocations can be decentralized via market arrangements this paper is a study of the dynamics of the efficient distribution of consumption in an exchange economy with private information the economy we study has a constant endowment flow of a single non storable consumption good which is to be allocated each period among a large number of consumers each period these consumers experience unpredictable idiosyncratic privately observed taste shocks affecting their marginal utility of current consumption efficiency dictates that more resources be allocated to those consumers who in any given period have a high marginal utility of current consumption

redistribution of individual pension wealth to survivor pensions evidence from a stated preferences analysis abstract pension schemes in the netherlands allow workers to redistribute their own pension wealth to increase the survivor pension of their partner however due to lacking communication and knowledge of survivor pensions among workers and also due to the lack of transparent products and choice architecture redistribution remains limited this paper uses a stated preferences experiment that is explicitly designed for workers with a partner in the age group of 55 to 65 years to elicit their pension redistribution preferences we find that on average the preferred pension wealth redistribution amounts to 50 35 of all individuals have such a preference 33 of all individuals would prefer less redistribution and 32 percent prefers to redistribute more pension income to the partner upon one s death we further show that total family income during working life does not affect the redistribution to survivor pensions however the distribution of the contribution to total family income before retirement across partners as well as the survival likelihood of the partner and the number of years the partner is expected to survive have a significant causal impact on the preferred pension redistribution decision the preference for redistribution to survivor pensions also depends significantly on personal characteristics preferences and social attitude males have a significantly stronger preference for redistribution compared to females moreover forward looking more risk averse and more altruistic individuals have a stronger preference to redistribute part of their pension wealth to a survivor pension finally in particular when employees have the perception that their partner is more forward looking they are willing to invest more in a survivor pension

the joint design of unemployment insurance and employment protection a first pass unemployment insurance and employment protection are typically discussed and studied in isolation in this paper we argue that they are tightly linked and we focus on their joint optimal design in a simple model with risk averse workers risk neutral firms and random shocks to productivity we show that in the first best unemployment insurance comes with employment protection in the form of layoff taxes indeed optimality requires that layoff taxes be equal to unemployment benefits we then explore the implications of four broad categories of deviations from first best limits on insurance limits on layoff taxes ex post wage bargaining and ex ante heterogeneity of firms or workers we show how the design must be modified in each case finally we draw out the implications of our analysis for current policy debates and reform proposals from the financing of unemployment insurance to the respective roles of severance payments and unemployment benefits

the empirical content of nash bargained household behavior in households whose allocation decisions can be represented as nash bargained household decisions extrahousehold environmental parameters eeps serve as pure shifters of the threat points the comparative statics of changes in demands due to changes in these eeps are given these are incorporated into a comprehensive statement of the empirical content of nash bargained household behavior including a nash generalization of barten s 1966 fundamental matrix equation of the theory of consumer demand estimation and data requirements are discussed along with nested testing of the following structure the neoclassical model is nested in the nash bargained model which in turn is nested in an unrestricted model of household demands emphasized throughout is the enriched menu of explanatory variables for demand analysis provided by the nash model as well as the model s ability to jointly analyze i household formation and ii intrahousehold allocation decisions

parent child bargaining parental transfers and the post secondary education decision schooling decisions are often modelled within a unitary preference framework in this article an alternative to the unitary preference model is proposed in which parents and child have conflicting preferences over parental transfers and the level of post secondary schooling and participate in cooperative bargaining as a means of resolving this conflict comparisons of the implications of the bargaining and unitary preference models motivate tests of parental altruism and income pooling to test these hypotheses reduced form transfer and schooling equations are estimated using data from the high school and beyond surveys the evidence suggests that the unitary preference model be rejected

a theory of rational marriage and divorce abstract despite high rates of cohabitation before marriage and considerable efforts invested in the search for a life partner a high number of marriages end in divorce this paper develops a model of household formation and dissolution in which it may be rational for individuals to marry fully anticipating that they will subsequently divorce economies of scale associated with living as a couple rather than in two separate households provide an incentive to marry problems with free riding in the provision of household collective goods may lead to divorce marriages which involve partners who are similar in tastes or in their productive capacities and in which private goods are equally shared are the most likely to be stable in contrast marriages which involve very disparate partners or which share the fruits of market labor very unequally between the partners are more likely to be shortlived and end in divorce

separate spheres bargaining and the marriage market this paper introduces the separate spheres bargaining model a new model of distribution within marriage it differs from divorce threat bargaining models e g manser brown mcelroy horney in that the threat point is not divorce but a noncooperative equilibrium within marriage this noncooperative equilibrium reflects traditional gender roles the predictions of our model thus differ from those of divorce threat bargaining models in the separate spheres model cash transfer payments to the mother and payments to the father can but need not imply different equilibrium distributions in existing marriages in the long run the distributional effects of transfer policies may be substantially altered by changes in the marriage market equilibrium

optimal control of a mean reverting inventory motivated by empirical observations we assume that the inventory level of a company follows a mean reverting process the objective of the management is to keep this inventory level as close as possible to a given target there is a running cost associated with the difference between the actual inventory level and the target if inventory deviates too much from the target management may perform an intervention in the form of either a purchase or a sale of an amount of the goods there are fixed and proportional costs associated with each intervention the objective of this paper is to find the optimal inventory levels at which interventions should be performed as well as the magnitudes of the interventions to minimize the total cost we solve this problem by applying the theory of stochastic impulse control our analysis yields the optimal policy which at times exhibits a behavior that is not intuitive

family policy with non cooperative families we consider a non cooperative model of a family s time allocation between market work and providing a home produced family public good such as child care or care for the elderly the model predicts underprovision of the public good because of crowding out this does not necessarily warrant public provision in contrast to other approaches in family economics we find that attempts to redistribute between spouses may alter the final distribution within the marriage and that such a policy may be pareto improving we also find that some degree of progressivity of the income tax can be welfare improving

nonparametric testable restrictions of household behavior this paper uses semialgebraic theory to derive nonparametric testable restrictions of paretoefficient bargaining behavior within a household these tests are analogous in form to samuelson s weak axiom of revealed preference warp and are defined over data on household level consumption and individual labor supplies thus without observing intrahousehold division of consumption we can nonparametrically test whether there exist nonsatiated utility functions such that household behavior is pareto efficient i apply these tests to data from the national longitudinal surveys on u s households and find that preferences exist that are consistent with pareto efficiency for each household in the data set