ABSTRACT
In recent years there has been an increased analysis of the distribution of household resources, both within and across households, that are linked by family ties. This literature has addressed a variety of issues, such as the extent to which income shocks are redistributed across households, as might be expected in the presence of family-based altruism (Altonji et al. 1992, 1997), and whether the distribution of resources within households is importantly influenced by the bargaining position of individuals or groups within the household (McElroy 1990; Schultz 1990; Thomas 1990; Hayashi 1995). A common feature of this literature is that it has not generally accounted for the fact that co-residence by related sub-families is a choice that may both influence and be influenced by the resource allocation decisions. Of particular concern is the fact that the selection process associated with the decision to co-reside may bias statistical estimates, leading to inappropriate inference.
