Intra-Household Resource Allocation and Familial Ties

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractIn this paper, we investigate the link between intra-household resource allocation and familial ties between household members. We show that, within the same geographic, economic and social environments, households where members have 'stronger' familial ties (e.g. a nuclear family household) achieve near Pareto efficient allocation of productive resources and Pareto efficient allocation of consumption while households with 'weaker' familial ties (e.g. an extended family household) do not. We propose a theoretical model of the household based on the idea that altruism between household members vary with familial ties which generates predictions consistent with the observed empirical patterns. Non-Technical SummaryThe question as to how resources are allocated within households has long been of interest to economists. Particularly in societies where state support and market institutions are weak, the household remains an important unit of production, and investment in the human capital of children.The two theories of intra-household allocation that have received the most attention in the academic literature and tested most frequently using household data are the Unitary Model and the Collective Model. The Unitary Model, which postulates that the household behaves as if it were a single individual, has been consistently rejected by empirical evidence. On the other hand, tests of the Collective Model, which postulates that household members with conflicting preferences are able to achieve Pareto efficient outcomes, have yielded mixed results --not rejected for labour supply decisions in developed countries or consumption decisions in developing countries, but commonly rejected for production in African households.In this paper we investigate intra-household resource allocation in rural Burkina Faso and show that, within the same geographic, economic and social environment nuclear-family households achieve near Pareto efficiency in allocating productive resources and Pareto efficient allocation of consumption, while extended-family households do not.We propose a theory where household members with closer familial ties exhibit higher levels of altruism towards each other, which in turn motivate them to make intra-household transfers close to that required for efficiency. The theory predicts that household members who share a nuclear family tie (as opposed to an extended-family tie or no family ties) should contribute higher ...

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