Empirical Economics

, Volume 53, Issue 2, pp 853–878 | Cite as

The impact of targeting policy on spouses’ demand for public goods, labor supplies and sharing rule



This paper studies the impact of targeted unconditional cash transfers on the spouses’ demand for public goods, labor supplies and sharing of resources. We estimate a collective labor supply model with distributional factors which is extended to include preferences over marketable public goods (including child goods). In this way, unlike previous research, we consider the impact of such transfers on the intrahousehold allocation of resources and distinguish between the labeling and recipient effects. We exploit the UK experience and find evidence in favor of the collective model with separable preferences over labor supplies and public goods. This finding implies a recipient effect and not a labeling effect of child benefits. Given the household’s unearned income, the bigger the wife’s bargaining power, the more the resources allocated to public goods (including child goods) and the wife’s private consumption. The results can be useful in the design of family policy which aims to improve the relative welfare of children within the family and alleviate any intrahousehold consumption inequalities.


Child benefits Targeting Labeling effect and recipient effect Individual labor supply Public goods Collective model and intrahousehold allocation 

JEL Classification

D12 I38 J16 J18 J22 H31 



I am very grateful to the Editor, Associate Editor and two anonymous referees for their valuable comments and suggestions. Financial support from the University of Cyprus and availability of the UK Family Survey data from the Central Statistical Office through the ESRC Data Archive are also thankfully acknowledged. I am solely responsible for the interpretation of the data and all errors.


  1. Akerlof G (1978) The economics of “tagging” as applied to the optimal income tax, welfare programs, and manpower planning. Am Econ Rev 68(1):8–19Google Scholar
  2. Angrist JD, Pischke JS (2015) Mastering metrics: the path from cause to effect. Princeton University Press, PrincetonGoogle Scholar
  3. Apps PF, Rees R (1997) Collective labor supply and household production. J Polit Econ 105:178–190CrossRefGoogle Scholar
  4. Beatty TKL, Blow L, Crossley T, O’Dea C (2014) Cash by any other name? Evidence on labeling for the UK winter fuel payment. J Public Econ 118:86–96CrossRefGoogle Scholar
  5. Becker GS (1991) A treatise on the family. Harvard University Press, CambridgeGoogle Scholar
  6. Bertrand M, Mullainathan S, Miler D (2003) Public policy and extended families: evidence from pensions in South Africa. World Bank Econ Rev 17(1):27–50CrossRefGoogle Scholar
  7. Blow L, Walker I, Zhu Y (2012) Who benefits from child benefit? Econ Inq 50(1):153–170CrossRefGoogle Scholar
  8. Blundell R, Duncan A, Meghir C (1998) Estimating labour supply responses to tax reforms. Econometrica 66(4):827–861CrossRefGoogle Scholar
  9. Blundell R, Chiappori PA, Meghir C (2005) Collective labour supply with children. J Polit Econ 113(6):1277–1306CrossRefGoogle Scholar
  10. Blundell R, Chiappori PA, Magnac T, Meghir C (2007) Collective labour supply: heterogeneity and non-participation. Rev Econ Stud 74:417–445CrossRefGoogle Scholar
  11. Bobonis GJ (2009) Is the allocation of resources within the household efficient? New evidence from a randomized experiment. J Polit Econ 114(3):453–502CrossRefGoogle Scholar
  12. Browning M, Meghir C (1991) The effects of male and female labor supply on commodity demands. Econometrica 59(4):925–951CrossRefGoogle Scholar
  13. Browning M, Chiappori PA (1998) Efficient intra-household allocations: a general characterization and empirical tests. Econometrica 66:1241–1278CrossRefGoogle Scholar
  14. Browning M, Bourguignon F, Chiappori PA, Lechene V (1994) Income and outcomes: a structural model of intrahousehold allocation. J Polit Econ 102(6):1067–1096CrossRefGoogle Scholar
  15. Case A, Deaton A (1998) Large cash transfers to the elderly in South Africa. Econ J 108(450):1330–13611CrossRefGoogle Scholar
  16. Cherchye LJH, de Rock B, Vermeulen FMP (2012) Married with children: a collective labor supply model with detailed time use and intrahousehold expenditure information. Am Econ Rev 102(7):3377–3405CrossRefGoogle Scholar
  17. Chiappori PA (1988) Rational household labor supply. Econometrica 56(1):63–90CrossRefGoogle Scholar
  18. Chiappori PA (1992) Collective labour supply and welfare. J Polit Econ 100(3):437–467CrossRefGoogle Scholar
  19. Chiappori PA, Fortin B, Lacroix G (2002) Marriage market, divorce legislation, and household labor supply. J Polit Econ 110(1):37–72CrossRefGoogle Scholar
  20. Couprie H (2007) Time allocation within the family: welfare implications of life in a couple. Econ J 117(516):287–305CrossRefGoogle Scholar
  21. Dauphin A, El Lahga AR, Fortin B, Lacroix G (2011) Are children decision-makers within the household? Econ J 121:871–903CrossRefGoogle Scholar
  22. Donni O (2003) Collective household labor supply: nonparticipation and income taxation. J Public Econ 87:1179–1198CrossRefGoogle Scholar
  23. Duflo E (2000) Child health and household resources: evidence from the South African old-age pension program. Am Econ Rev Pap Proc 90(2):393–398CrossRefGoogle Scholar
  24. Duflo E (2003) Grandmothers and granddaughters: old-age pensions and intrahousehold allocation in South Africa. World Bank Econ Rev 17(1):1–25CrossRefGoogle Scholar
  25. Edmonds EV (2002) Reconsidering the labelling effects of child benefits: evidence from a transitional economy. Econ Lett 76:303–309CrossRefGoogle Scholar
  26. Eissa N (1995) Taxation and labor supply of married women: the tax reform act of 1986 as a natural experiment. NBER working paper 5023. National Bureau of Economic Research, Cambridge, MAGoogle Scholar
  27. Greener K, Cracknell R (1998) Child Benefit. Research paper 98/79, House of Commons LibraryGoogle Scholar
  28. Haddad L, Kanbur R (1992) Intrahousehold inequality and the theory of targeting. Eur Econ Rev 36:372–378CrossRefGoogle Scholar
  29. Kooreman P (2000) The labeling effect of a child benefit system. Am Econ Rev 90:571–583CrossRefGoogle Scholar
  30. Lundberg S, Pollak RA, Wales TJ (1997) Do husbands and wives pool their resources? Evidence from the U.K child benefit. J Hum Resour 32:463–480CrossRefGoogle Scholar
  31. Lyssiotou P, Pashardes P, Stengos T (2004) Estimating the black economy based on consumer demand approaches. Econ J 114(497):622–640CrossRefGoogle Scholar
  32. Mroz TA (1987) The sensitivity of an empirical model of married women’s hours of work to economic and statistical assumptions. Econometrica 55:765–799CrossRefGoogle Scholar
  33. Pollak RA (1969) Conditional demand functions and consumption theory. Quart J Econ 83:70–78CrossRefGoogle Scholar
  34. Pollak RA (1971) Conditional demand functions and implications of separable utility. South Econ J 37(4):423–433CrossRefGoogle Scholar
  35. Samuelson PA (1956) Social indifference curves. Quart J Econ 70:1–21CrossRefGoogle Scholar
  36. Schultz TP (1990) Testing the neoclassical model of family labor supply and fertility. J Hum Resour 25:599–634CrossRefGoogle Scholar
  37. Stern N (1986) On the specification of labour supply functions. In: Blundell R, Walker I (eds) Unemployment, search and labour supply. Cambridge University Press, CambridgeGoogle Scholar
  38. Thomas D (1990) Intrahousehold resource allocation: an inferential approach. J Hum Resour 25:635–664CrossRefGoogle Scholar
  39. Ward-Batts J (2008) Out of the wallet and into the purse: using micro data to test income pooling. J Hum Resour 43(2):325–335Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2016

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of CyprusNicosiaCyprus

Personalised recommendations