Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/83663 
Authors: 
Year of Publication: 
2013
Series/Report no.: 
SOEPpapers on Multidisciplinary Panel Data Research No. 587
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
Standard household economics assumes that couples pool their incomes and share the sum equally, which is a necessary prerequisite for computing equivalent incomes and hence all statements about the distribution of personal incomes and income poverty. However, since cohabitation without marriage is on the rise and since income pooling is less frequent among cohabiting couples, income is also pooled and shared less frequently. In conclusion, statements based on these two assumption are becoming increasingly invalid. Using data from the German Socio-Economic Panel Study, I analyze the incidence and determinants of income pooling and then proceed to determine whether couples who pool their incomes share the sum equally. In contrast to most existing studies, I use a holistic approach to identify sharing within households by analyzing data on financial satisfaction. Concerning the relation between income sharing and income pooling, I account not only for the dominance of pooling over sharing, but also for the possibility of correlated error terms of the pooling and the sharing equation. A further advancement of this paper is the use of panel data, which enables me to account for unobserved heterogeneity at the household level. The results indicate that the hypothesis of equal sharing even has to be rejected for couples who pool their incomes, which implies that a wide range of analyses of income poverty, for instance, may be misleading.
Subjects: 
income pooling
intra-household allocation
subjective well-being
two-part model
JEL: 
D31
I32
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.