Intra-Household Allocation Decisions
Paper Session
Saturday, Jan. 6, 2024 8:00 AM - 10:00 AM (CST)
- Chair: Paula Calvo, Arizona State University
Who Pays for Childcare? Social Norms, Household Spending, and the Child and Dependent Care Credit
Abstract
Despite significant progress in the labor market over the last 50 years, women continue to shoulder the bulk of childcare responsibilities within households. This has serious, negative consequences for women's economic prospects. Our research seeks to explore the impact of gender norms surrounding childcare responsibilities on labor supply and consumption inequality between spouses. To achieve this, we have developed a comprehensive model of household labor supply that takes into account social norms governing childcare. Specifically, we examine how husbands and wives decide on the appropriate balance between providing childcare themselves and outsourcing to the market. When social norms dictate that women are responsible for childcare, a decrease in the price of market childcare leads to greater utility gains for women. However, if norms dictate that both spouses share childcare responsibilities equally, men benefit more from reduced childcare costs. To test these predictions, we analyze the effects of a childcare tax credit that resulted in exogenous changes in childcare prices. Our findings are consistent with our model, indicating that women's clothing expenditures increase relative to men's in households that benefit from the tax credit.Gender Norms and Specialization in Household Production: Evidence from a Danish Parental Leave Reform
Abstract
Parental leave is viewed as crucial to alleviating the gender inequalities that arise upon parenthood, but policies are often ineffective. This paper examines the impact of expanding parental leave in Denmark. The results show that mothers increase their leave by 5 weeks, while the average leave duration of fathers remains unchanged. In turn, the earnings gap within couples increases. Leave duration is unaffected by relative earnings, and is instead highly consistent with the role of gender norms. I document both inter-generational spillovers from maternal labor supply and peer effects among sisters who take a longer leave if exposed to the reform-induced change in leave duration.Estimating Intra-Household Sharing from Time-Use Data
Abstract
Households do not share resources equally between their members, so estimating intra-household inequality is crucial to understanding overall inequality. However, estimating the sharing rule is difficult because expenditure data is almost always at the household level. A growing literature proposes methods to estimate sharing from individual-level demand data for a single private good, the `assignable good’.This paper bridges between, and combines the strengths of, two separate strands of the literature. It retains the ease of implementation on widely available data of Lechene, Pendakur and Wolf (2022). They show it is possible to estimate resource shares by linear regression, with a transparent identification proof. I extend this result to a setting with time-use, as well as material goods; public goods, as well as private (and shareable) goods; and price-variation. This more realistic underlying structural model resembles that from other strands of the literature which instead are characterised by more complex identification proofs and hard-to-implement estimation strategies.
Additionally, while the literature focuses on clothing as the assignable good, this paper is the first to use private leisure instead. Using private leisure as the assignable good can substantially increase the accuracy of sharing rule estimates for multiple reasons. Crucially, it is more credibly private, which is key to the identification result. Moreover, I show that, using private leisure as the assignable good, it is possible to estimate sharing from time-use data alone, opening new applications where accurate expenditure data is lacking.
I illustrate my approach for UK heterosexual working couples without cohabiting children, using high-quality diary data. I find that equal sharing does not hold and that, on average, men command a higher proportion of resources than women. I also find substantial variation in the sharing rule between households, depending on characteristics of the couple in a manner consistent with bargaining theory.
JEL Classifications
- D1 - Household Behavior and Family Economics