Identification of Random Resource Shares in Collective Households With an Application to Microcredit in Malawi

Abstract

We propose methods to estimate resource shares of individuals in collective households that do not require restrictions on individual preferences, but rather rely on the existence of distribution factors. We provide theorems that show identification of the distribution of these resource shares. Thus, we can identify the conditional mean of resource shares given observable demographics and distribution factors, and we allow for and identify random variation in resource shares given these observables. We use our model to investigate the effects of credit on the within-household allocation consumption in Malawi. We find: that agricultural credit and microcredit may divert resources away from children; that large loans shift resources to men; and if loans have female signatories, then resources are diverted to women and children.