Economic and Social Status in Household Decision-making: Evidence Relating to Extended Family Mobility

Abstract

Models of the allocation of household resources use as a decision rule either the maximisation of a household utility function or the solution to a Nash-bargaining game. The literature on residential mobility has exclusively used the former to analyse the household's decision to change location. This is despite the strong empirical evidence that allocations in other areas are more consistent with the bargaining model. In this paper micro-data from Taipei, Taiwan, are used to determine which approach is most appropriate for studying housing mobility decisions. The mobility decisions of nuclear and different types of extended family household are compared to test whether the social and economic roles of different generations affect the household decision process, as is consistent with the bargaining approach. Thus, household mobility is analysed with a richer description of household structure than is found in the current literature, which implicitly treats households as either a nuclear family or some smaller unit. The results support the bargaining model of household decision-making. Conditional probabilities differ between nuclear and extended families, when a member of the eldest generation in an extended household is the household head, and when a member of the eldest generation contributes to household earnings. Of these, it is found that economic status is paramount to social status.