Research

Do household members hide income from one another? Consistent with income hiding within the household, I find that respondents in Kenya and Indonesia underestimate labor income of other household members, and that respondents under-report own income in front of others. Households with measured hidden income consume more private goods such as tobacco, and spend less on groceries. This is correlated with worse child outcomes, but only when income is hidden from the wife. Income hiding is inconsistent with existing models of household behavior. I develop a household model where each member can strategically underreport income, increasing private consumption at the expense of household efficiency. In equilibrium, cooperation is endogenous and may be incomplete, as household members collectively allocate reported income, but total income is not allocated efficiently. Empirical tests reject collective rationality and support partial income pooling, which is consistent with strategic hidden income.

Do providing women with conditional cash transfers increase their Pareto weight within the household as much as if they entered employment? Using data between 1997 to 2007 from Mexico's Progresa program (also known as Oportunidades/Prospera), I find that both receiving Progresa transfers and female employment leads to household expenditure reallocation from men's clothing to girls’ and women's clothing. This provides evidence against the household unitary model. Meanwhile, Progresa leads to an increase in boys’ clothing expenditures while female employment leads to a decrease in boys’ clothing expenditures. This suggests that Progresa reallocates household resources from adults to children, while female employment reallocates resources from male family members to female ones.