Hidden in Plain Sight: Asymmetric Information and Hidden Income within the Household (job market paper) [working paper]
Conference Presentations: Fourth SANEM-World Bank North America Discussion Forum, CES North America Conference 2023, AMIE 2nd Workshop in Applied Microeconomics 2022, ADE 2022, YES 2022, 14th Joint IOS/APB/EACES Summer Academy, ICDE 2022, NOVAFRICA 2022, NCDE 2022, SEHO 2022, DEVPEC 2022, PACDEV 2022, ACLEC Poster Session 2021
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.
Causes and Consequences of Intra-Household Hidden Income [work in progress]
Conference Presentations: PACDEV2023, WGAPE 2023 Berkeley, AFE 2022
Why do couples hide income and what are the possible consequences? I hypothesize that couples hide income from each other because they have misaligned preferences, and an individual is more likely to hide from their spouse if they don’t have a say over how to allocate household resources. I hypothesize that hidden income causes inefficiency and higher spending in private goods. However, income hiding can also help an individual with low bargaining power to allocate more resources to themselves, and can potentially reduce consumption inequality within the household. I recruit 575 married couples from Kenya to a lab experiment, where they allocate lab endowment between a private pot (hidden income) and a household pot (revealed income). I experimentally vary the observability of income and study how exogenously unobservable income affect individual’s choices to share income and to consume.
Welfare or Work: Which is Better for Women Empowerment? Evidence from Mexico [working paper available upon request]
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.