Essays in Household Economics and Econometrics

Abstract

My doctoral research comprises both structural empirical work in the field of household economics (Chapters 1 and 3) and reduced-form theoretical work in econometrics (Chapter 2). The first chapter quantifies consumption gains in the form of consumption expenditure savings for couples living together versus apart. Moreover, I comprehensively analyze the key drivers of heterogeneity in consumption gains across couples. The second chapter, which is joint work with Stefan Hoderlein, develops the first difference-in-differences model for binary choice outcome variables when treatment effects are heterogeneous. Finally, in the third chapter, I study the realized gains in consumption levels upon move-in from single to couple and move-out from couple to single, separately by gender. Chapter 1. In “Heterogeneity in Consumption Gains from Living Together as a Couple”, I estimate consumption gains from living together versus apart. Specifically, this chapter quantifies these gains from consumption economies of scale for married as well as unmarried cohabiting couples in the U.S. I also comprehensively analyze the determinants of heterogeneity in consumption gains. For this purpose, I extend a recent collective household model to incorporate heterogeneity in consumption economies of scale and perform structural estimation using data from the Panel Study of Income Dynamics (PSID). I find that couples living together save an average of 14 percent in annual consumption expenditures compared to their counterfactual spending when living apart. Moreover, older couples and homeowner couples experience higher consumption economies of scale and thus higher consumption gains. I do not detect marital status to be a determining factor. These results have implications for appropriate adjustment of poverty thresholds across households of different sizes. Chapter 2. In “Binary Choice Difference-in-Differences Model with Heterogeneous Treatment Effects”, we develop the first Difference-in-Differences Model for binary choice outcome variables when treatment effects are heterogeneous. Our main result establishes identification of the average treatment effect on the treated (ATT). Moreover, we present two extensions. First, we show identification of the joint distribution of the actual and counterfactual latent outcome variable in the treatment group. Second, we extend the basic model to allow for the inclusion of covariates. We suggest an estimator for the ATT and evaluate its finite sample properties with the help of Monte Carlo simulations. Chapter 3. In “Realized Consumption Gains from Living Together as a Couple by Gender”, I am among the first to analyze how consumption gains from living together as a couple are split between men and women and whether this varies by individual-level or couple-level observables. Understanding individual-level consumption gains is important for rationalizing marriage and cohabitation decisions on the micro-level, and marriage and cohabitation patterns on the macro-level. I use the extended collective household model from Chapter 1 and data from the PSID to estimate male and female realized consumption gains from moving in as a couple and moving out of a couple. Average realized consumption gains upon move-in are positive for women and negative for men. This reverses for dissolving couples. Lastly, individuals who move in with their spouse have higher realized consumption gains than individuals who decide to cohabit without a marriage certificate.