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Out of the Wallet and into the Purse

Using Micro Data to Test Income Pooling

This paper uses an exogenous change in the intrahousehold distribution of income, provided by a change in United Kingdom Family Allowance policy to test the income-pooling hypothesis implied by unitary household models. Expenditure shares are estimated for a wide range of goods using household-level data. Shifts in expenditure shares suggest that children and mothers benefited at the expense of fathers when this policy change shifted income within households from men to women. Similar shifts are not found among married-couple households with no children. This paper refutes income pooling, and confirms and extends results in Lundberg, Pollak, and Wales (1997).