Household Responses to Cash Transfers

This paper estimates a collective model of the household and investigates how parents reach decisions to allocate resources. Using data from PROGRESA, we test restrictions rationality on large variety specifications show that, contrary previous results, this modeling approach cannot rationalize decision process. We provide some evidence that observed inefficiency is driven by group receiving cash transfers. These results are consistent with idea possible indirect effect CCT programs may be enhance disagreements between spouses which trigger an inefficient allocation their