Drug Consumption and Intra-household Distribution of Resources: The Case of Khat in Djibouti Seminar Federico Perali Department of Economics University.

Slides:



Advertisements
Similar presentations
LABOUR FORCE SURVEY The aim is to show that only an integrated approach to these data makes the contribution of Italian women to the economy more visible.
Advertisements

The Economics of Childcare Alan Duncan University of Nottingham and Institute for Fiscal Studieshttp://
1 Cooperation and conflict within couples: The gendered distribution of entitlement to household income GeNet Conference, Cambridge March 2009 Jérôme.
1 Alberto Montanari University of Bologna Basic Principles of Water Resources Management.
Are you a Rotten Kid? Household decision-making Ruth Tarrant.
Fairness and Social Welfare Functions. Deriving the Utility Possibility Frontier (UPF) We begin with the Edgeworth Box that starts with individual 1,and.
Revealed preference approach to multiperson consumption behavior Laurens Cherchye MWC – 10/12/2009.
Estimating Net Child Care Price Elasticity Of Partnered Women With Preschool Children Using Discrete Structural Labour Supply-child Care Model Xiaodong.
Section 3/6/2009  VSL  Static vs. Dynamic Efficiency (Example: optimal extraction of a non-renewable resource)  Defining/ measuring scarcity  Definitions.
Linear Programming Problem. Introduction Linear Programming was developed by George B Dantzing in 1947 for solving military logistic operations.
What are the causes of age discrimination in employment?
Identifying Non-Cooperative Behavior Among Spouses: Child Outcomes in Migrant-Sending Households Session 4E: Growth, Jobs and Earnings May 15, 2008 Joyce.
Appendix Ghana. Conclusion per capita growth is accompanied by an increase in output per worker in the primary and tertiary sectors a decrease in output.
Chapter 1 An Introduction Different economic outcomes Using economics to explain differences Different economic outcomes Using economics to explain differences.
Sociology of The Family
Spending time and money within the household Martin Browning University of Oxford Mette Gørtz AKF, Copenhagen IFS Family Workshop, September 2006.
Nutritional Anthropology PHN 804 January Introduction  Nutritional characteristics of the diet have enormous influence on the development and health.
Millenium Development Goals: Employment related Indicators
ELM Part 2- Economic models Manuela Samek
© The McGraw-Hill Companies, 2005 Advanced Macroeconomics Chapter 16 CONSUMPTION, INCOME AND WEALTH.
Aging and the Welfare State: A Political Economy Model Assaf Razin, Efraim Sadka and Edith Sand October 2005.
Household Production and Life-Cycle and Labor Supply
Supply of Labor. Labor Supply Different questions to be asked: –Work or don’t work –Number of hours of work effort –Occupational choice –Locational choice.
Introduction to Macro Economics -II
Copyright © 2009 Pearson Education, Inc Topic 3. Chapters 6 & 7 Supply of Labor.
Second Conference: “New Directions in Welfare” Paris, July 6th-8th, 2011 A Structural Model of Female Empowerment and Capabilities Paola Ballón Fernández.
Women and Poverty.
Policy Issues of EDRC Models Ex-ante Poverty Impact Assessment of Macroeconomic Policies International Workshop Washington, D.C. October 14-15, 2003 Aghasi.
2000/2001 Household Budget Survey (HBS) Conducted by The National Bureau of Statistics.
Constructing the Welfare Aggregate Part 2: Adjusting for Differences Across Individuals Bosnia and Herzegovina Poverty Analysis Workshop September 17-21,
Economics of Gender Chapter 5 Assist.Prof.Dr.Meltem INCE YENILMEZ.
Chapter 2 Labor Supply.
Chapter 16 Income Taxation
LABOR SUPPLY I. Consumer theory II. Labor supply by individuals III. What happens when wages change IV. Elasticity of labor supply.
11.1 Ch. 11 General Equilibrium and the Efficiency of Perfect Competition.
Chapter 3 section 4 Providing a Safety Net Income and Poverty In a Market economy, income depends primarily on earnings, which depend on the value of each.
Welfare Reform and Lone Parents Employment in the UK Paul Gregg and Susan Harkness.
Targeted Interventions in Health Care: The case of PROMIN Sebastian Galiani Mercedes Fernandez Ernesto Schargrodsky.
Chapter 2 Labor Supply Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin.
GCH: Future of Families Economic Issues related to Fertility.
LABOUR FORCE PARTICIPATION, EARNINGS AND INEQUALITY IN NIGERIA
LECTURER: JACK WU The Theory of Property Tax. Outline Topic I: What Are Property Taxes? Topic II: Property Tax Incidence Topic III: Property Tax Capitalization.
DEMOGRAPHIC VARIABLES AND ITS SIGNIFICANCE FOR BUSINESS ACTIVITIES By Prof.Dr.Tadjuddin Noer Effendi MA.
Providing a Safety Net. Why Households Differ One of the main reasons why household income differs is because the number of household members who work.
1 Effects of Medicaid Policy on Long-Term Care Decisions and Medical Services Utilization among the Low-Income Elderly Song Gao SUNY-Stony Brook.
MIRPAL CONFERENCE ON REMITTANCES Remittances and economic development: the case of Kosovo 1 Borko Handjiski Economist Cholpon-Ata, Kyrgyzstan 11 th of.
Time, Money and Inequality in International Perspective Lars Osberg -Dalhousie University -I.S.E.R. U of Essex.
Intra-household Allocation Conflict and Cooperation in the Family.
Off- Farm Labor Supply of Farm- Families in Rural Georgia Dr. Ayal Kimhi Ofir Hoyman Tbilisi, 2005.
The Division of Labour within the household: Is There any Escape from Traditional Gender Roles? Catherine Sofer (Paris School of Economics and University.
TRADE LIBERALIZATION AND CHILDREN Understanding and coping with children vulnerabilities Javier Escobal Group for the Analysis of Development.
CDAE Class 3 Sept. 4 Last class: 1. Introduction Today: 1. Introduction 2. Preferences and choice Next class: 2. Preferences and choice Important.
Social block for CGE on Russia: model choices, data and other issues Irina Denisova Center for Economic Policy Research at the New Economic School.
The goods market: some exercise academic year 2015/16 Introduction to Economics Augusto Ninni 1.
Journal of Economic Behavior and Organization Presented by: Kuan Chen.
An Experimental Study of Bargaining Behavior within Households in Rural Senegal Gerrit Antonides and Rianne van Beek.
Household Production and Life- Cycle and Labor Supply.
Specific Issues of Gender in Accessing Social Protection and Labour Market Opportunitites Athia Yumna, The SMERU Research Institute.
Children’s Emotional and Behavioral Problems and Their Parents’ Labor Supply Patrick Richard, Ph.D., M.A. Nicholas C. Petris Center on Health Markets and.
Economics of Demeny Voting Reiko Aoki (CIS,IER, Hitotsubashi University) “Political Economy of Low Fertility of Aging” Workshop Center for Intergenerational.
Þjóðarspegill 2008: Níunda ráðstefna um rannsóknir í félagsvísindum Allocation of Public and Private Goods within the Household Helga Kristjánsdóttir Þjóðarspegill.
A Collective Model of the Household Enterprise
The ILO Decent Work Indicators
FAMILY BARGAINING: A STACKELBERG APPROACH Joaquín Andaluz, Miriam Marcén and JoséAlbertoMolina University of Zaragoza.
Deild SCHOOL OF SOCIAL SCIENCES Titill rannsóknar Höfundur
Informal Sector Statistics
A Collective Model of the Household Enterprise
PUBLIC FINANCE AND TAX POLICY
Sampling for Impact Evaluation -theory and application-
Presentation transcript:

Drug Consumption and Intra-household Distribution of Resources: The Case of Khat in Djibouti Seminar Federico Perali Department of Economics University of Verona, Italy Assistance in Institutional Strengthening and Agricultural Policies Damascus, September

Motivation Who is better off? A poor child living in a rich household or a rich child living in a poor household? Economists may have something to say in terms of material needs... less in terms of immaterial needs...

Objectives Identify the sharing rule between adults and children in Djiboutian families We use Khat consumption and expenditures on children’s education to learn about the intrahousehold decision process Definition. Sharing rule: is the rule governing the intrahousehold allocation of resources (money, time, goods). It is a measure of household inequality and of the distribution of power among household members. Being a function it is a policy interesting object.

Introduction to the analysis of the intra- household allocation of resources TRADITIONAL APPROACHES: FAMILY AS A “BLACK BOX” –UNITARY FRAMEWORK: THE FAMILY UTILITY FUNCTION IS INCREASING IN THE UTILITY OF THE MEMBERS, INDIVIDUAL AND HOUSEHOLD WELFARE MOVE IN THE SAME DIRECTION ALTERNATIVES APPROACHES: FAMILY AS A DYNAMIC ORGANIZATION OF INDIVIDUALS

Introduction to the analysis of the intra-household allocation of resource THE INTRA-HOUSEHOLD ALLOCATION OF RESOURCES IS EXPRESSION OF THE DISTRIBUTION OF THE BARGAINING POWER WITHIN THE FAMILY AND OF THE UNDERLYNG DECISIONAL PROCESSES TAKING INTO ACCOUNT THE INTRA-HOUSEHOLD DISTRIBUTION OF RESOURCES IS IMPORTANT TO MESASURE BOTH INDIVIDUAL AND HOUSEHOLD WELFARE THE WELFARE OF THE FAMILY MEMBERS DEPENDS ON HOW THE INCOME RECIPIENTS DECIDE TO SHARE THEIR RESOURCES BETWEEN INDIVIDUAL CONSUMPTION AND THE HOUSEHOLD BUDGET

Sociological models For a traditional family with the husband as the breadwinner ALTRUISTIC HUSBAND PATERNALISTIC AND BENEVOLENT HUSBAND EGOISTIC HUSBAND

Game theory as an instrument for interpreting the allocation mechanism Family decisions as a bargaining problem COOPERATIVE MODELS

Game theory as an instrument for interpreting the allocation mechanism THE COOPERATIVE NASH SOLUTION AS THE MAX OF THE HOUSEHOLD WELFARE FUNCTION COOPERATIVE MODELS: PARETO EFFICIENCY IMPLIES THE EXISTENCE OF THE SHARING RULE

The Edgeworth’s Box and the cooperative Nash solution

Collective models and Sharing Rule THE COLLECTIVE MODEL ENCOMPASSES THE COOPERATIVE AND NON COOPERATIVE MODELS WHEN THE SOLUTION S PARETO EFFICIENT GIVEN THE EFFICIENCY CONDITION, A TWO STAGE DECISION PROCESS IS ASSUMED: –FIRST, THE TOTAL HOUSEHOLD INCOME IS ALLOCATED AMONG THE DIFFERENT MEMBERS ACCORDING TO THE SHARING RULE ESTIMATED FROM THE OBSERVABLE BEHAVIOR; – SECONDLY, EACH PARTNER DECIDE WHAT CONSUME ON THE BASE OF AN INDIVIDUAL BUDGET CONSTRAINT

The Collective Model and the Sharing Rule The Pareto household program can be rewritten as an individual problem (Chiappori 1992) where phi(w,y) is the sharing rule describing the intra-household allocation process.

Khat in Djibouti An individual.... Good (bad ?) and a social plague Women oppose khat consumption, an amphetamine, by the males because khateur household-heads are likely to be more irritable and are less aware of the family needs. Djibouti is characterized by widespread child malnutrition. Especially among poor households there are significant differences in the nutritional status of children and women between households with and without khateur members. While the shares of education and health in total expenditure are low across all population quintiles, the share of khat is relatively high across all population segments indicating substitution between khat and other goods, especially among the poor. Khat share of total budget: 8% poor, 18 % medium, 23 % rich segments of the population

Definitions Definition 1: an exclusive good or bad is a private good-bad used by only one member of the household –An exclusive good or bad is thus a good or bad for which it is possible to unequivocally identify the user. Definition 2: an assignable good or bad is a private good or bad whose consumption by each member of the household can be observed. –Assignability depends on the fact that it is possible to observe who consumes the good and in what proportion. In the case of Djibouti it is appropriate to consider khat and cigarettes an exclusive good of the head of the household and of the adult males in general.

Assumptions Assumption 1: Consumption Set up. Partner's labour supply fixed and absence of child labour. Assumption 2: Children Representative. Children elect the mother (not the father) as the representative of their preferences and wills. Assumption 3: Individual Preferences. Wife's preferences are egoistic with respect to the husband and altruistic with respect to the children; husband's preferences are caring. Assumption 4: Exclusivity. Mother and children do not consume khat. Khat is an exclusive good consumed by the adult males and education an exclusive good of children. Assumption 5: No addiction. Khat consumption does not generate addiction in the strict sense of physical dependence. Assumption 6: Non-Consumption. The consumption of khat (or education) is absent in some families. This implies the presence of corner solutions.

Khat Consumption and Labour Supply Decisions NEGATIVE HEALTH CONSEQUENCES OF CHEWING KHAT DOES KHAT CONSUMPTION AFFECT THE LABOUR SUPPLY DECSIONS AND THE LABOUR PRODUCTIVITY OF THE KHATEURS MEMBERS?

Khat consumption and Labour supply decisions DOES KHAT CONSUMPTION AFFECT THE LABOUR SUPPLY DECSIONS OF THE NON KHATEURS MEMBERS?

Household-head labour supply estimation: two stage Heckman estimation method

Wife labour supply estimation: two stage Heckman estimation method

Khat consumption and labour supply decision KHAT CONSUMTION SIGNIFICANTLY AFFECTS THE LABOUR SUPPLY DECISIONS OF BOTH KHATEURS AND NON KHATEURS MEMBERS INCREASING LABOUR FORCE PARTICIPATION OF THE WIFE IS NECESSARY IN ORDER TO PROVIDE THE FINANCIAL MEANS FOR COVERING THE ESSENTIAL NEEDS OF THE FAMILY

Khat Consumption and Intra-household Resource Allocation DOES KHAT CONSUMPTION AFFECT THE FAMILY WELFARE AND THE BUDGET SHARE DEVOTED TO OTHER GOODS? TWO EXCLUSIVE GOODS: KHAT AS AN ADULT PRIVATE GOOD AND PULIC BAD EDUCATION AS A CHILDREN GOOD INTRA-HOUSEHOLD SHARING RULE BETWEEN ADULT MALES AND CHILDREN

Khat Consumption and Intra-household Resource Allocation A PARAMETRIC MODEL FOR ESTIMATING THE SHARING RULE Estimation: generalized Heckman procedure to account for zero consumption TWO DEMAND EQUATIONS: EXPENDITURE ON KHAT AND CIGARETTES AND EXPENDITURE ON EDUCATION THE SHARING RULE EQUATION IS A FUNCTION OF EXOGENUS VARIABLES AFFECTING THE DECSIONAL PROCESS BUT NOT INDIVIDUAL PREFERNCES

Estimation with two exclusive goods the sharing rule is identified up to a constant METHOD: JOINT ESTIMATION given

RESULTS: SHARING RULE ESTIMATES Average estimated sharing rule: 0.64

A Graph of the Sharing Rule

Conclusions I The estimates of the sharing rule and labour supply decisions show the negative impact of khat consumption on the allocation of resources within the family and on the welfare of non khateurs family members khat is at the same time a private and a public bad The Sharing Rule average value, 64%, indicates that khat is an adult good the consumption of which detracts resources that could be allocated amongst other members of the household and reinvested in education.

Conclusions II Aspects related to income formation and estimates of the sharing rule are inextricably linked: in Djibouti unemployment is a long-term structural problem. In general, males have greater access to the labour market: they are more educated and find better qualified occupations. Because the head of the household is the main wage earner makes households dependent upon how the head chooses to divide his earnings between private consumption and the family budget. Income redistribution policies would need to take into account the equality of household resource allocation to eradicate poverty: children are recipients of residual resources and women are negatively affected by an unbalanced resource distribution.