Abstract:
This paper studies how family structure shapes consumption inequality and poverty in the USA. Using PSID data and a collective household model, we estimate sharing rules for married and cohabitating couples and recover individual-level consumption. In the full sample, cohabitating couples appear more egalitarian on average, with women receiving a share of household resources 9% higher than married women. These differences reflect systematic differences in characteristics across union types and largely disappear when comparing otherwise similar couples. Half of the economy-wide consumption inequality is explained by inequality between and within married households. 7% comes from cohabitation, 23% from between singles while the rest is explained by inequality between these three groups. Quantitatively, distinguishing cohabitation increases the role of between-group inequality and changes the assessment of poverty.
