Intra-household allocations in rural Ethiopia: a demand systems approach

This article examines the effects of price, income and demographic changes on intra-household allocations by integrating the outlay equivalent method into the Quadratic Almost Ideal Demand System (QUAIDS). Tests for separability in preferences and “demographic separability” are conducted. Longitudinal data to control for household heterogeneity are used. Results indicate that Ethiopian rural households respond to price, income and demographic changes in a more complicated manner than usually presumed; price, income and demographic changes do not have similar effects on all household members. Income changes affect men and boys more than women and girls, but variations in prices affect women and boys more than men and girls. Even though outlay equivalent ratios on average indicate discrimination against girls, girls are more protected from fluctuations in income and prices compared to boys. The results highlight limitations of previous studies that ignore direct income and price effects.