Good-bye Lenin On Our Bank Account? Within-Household Allocation in East and West German Couples

Abstract

Using data from the German Socio-Economic Panel for the years 1999–2004, I estimate a collective discrete choice model of female labour supply with non-participation and non-linear taxation. I use the model to infer the share of household net income that women in couples receive for their individual consumption. In particular, I study whether the within-household allocation is more egalitarian for women who grew up in the former East Germany. The key identifying assumption is that some (but not all) parameters of the utility function are identical for single women and women in couples. I find that women receive about 67% of household net income for their individual consumption. There is no statistically significant difference with respect to the woman’s origin.