Poverty and inequality within Brazilian households: an application of a collective consumption model

Abstract

This paper provides the first empirical research on the intra-household distribution of resources and individual poverty levels in Brazil. A collective model for household behavior was estimated using cross-section microdata from the Brazilian Consumer Expenditure Survey. The findings show that the average share of household total expenditure is slightly larger for men than for women. The share of household resources accruing to children is in turn comparatively smaller. We also find that standard poverty indices overstate the incidence of child poverty. This study also provides suggestive evidence of sizeable scale economies of living together in the household which affects poverty measures. Poverty rates among adults are then smaller because parents are highly compensated by the economies of scale due to joint consumption. Our findings imply that intra-household resource allocation is crucial to the understanding of household members’ material well-being and for the design of redistributive policies.