Abstract
The structure of a family may have important consequences for the material well-being of its members. For example, in large families, an individual must share resources with many others, but she may benefit from economies of scale in consumption. In this paper, we study individual consumption in different types of households, with a focus on family structures that are common in developing countries. Based on a collective household model, we develop a new methodology to identify the intra-household allocation of resources and the extent of consumption sharing. We apply our methodology using data from Bangladesh and Mexico, and use the model estimates to compute poverty rates for men, women, and children. Contrary to existing poverty calculations that ignore either intra-household inequality or economies of scale in consumption, ours take into account both dimensions.
Highlights
The composition of households may have important consequences for the well-being of their members
We aim to identify important aspects of intra-household consumption in order to answer the following questions: What is the income adjustment that would make an only child just as well off as if she was living in a larger household? How much income would a member of an extended family require to attain the same standard of living that she would have if she was living in a nuclear family? In larger households, individuals are allocated a smaller share of the household budget, but they tend to benefit from scale economies: food waste per person, for example, is likely lower in larger households, and more people jointly consume goods that can be shared
We develop an identification method to recover intra-household resource allocation and economies of scale in consumption in a collective household framework
Summary
The composition of households may have important consequences for the well-being of their members. Contrary to developed countries, where the vast majority of households comprise either single adults or nuclear families with a small number of children, households in the developing world are large and typically include several generations and many children.. Contrary to developed countries, where the vast majority of households comprise either single adults or nuclear families with a small number of children, households in the developing world are large and typically include several generations and many children.1 In these countries, the welfare state is often limited and families are the primary providers of material and non-material support to their members. Quantifying this trade-off is necessary to compare individuals’ well-being across households and may be important for the correct measurement of poverty and inequality
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