On the expenditure-dependence of children’s resource shares

Collective household models posit that each household member has access to a fraction of the household budget, called a resource share, which defines the shadow budget faced by a household member. Together with the within-household shadow price vector, the shadow budget determines the material well-being of the household member. In general, it is difficult to identify resource shares from typical household-level consumption data. However, several recent papers have shown that if resource shares do not depend on total household expenditure, then identification of resource shares may proceed from commonly available Engel curve data. Unfortunately, typical datasets do not allow the testing of this restriction. In this paper, we use a novel Italian dataset to establish that children’s resource shares do not exhibit much dependence on total household expenditure. Thus, identification of resource shares on the basis of this restriction may be valid.