Pareto efficient intrahousehold allocations and land rights: evidence from South Africa

Abstract

We study whether South African farm households participating in a land reform program make Pareto efficient intrahousehold consumption decisions. Using evaluation survey data of beneficiary households participating in South Africa’s Land Redistribution for Agricultural Development (LRAD) program, we estimate and test the unitary and collective models of intrahousehold resource allocation. By estimating the households’ demand function’s responses to the size of land grant transfers going to resident men and women, we find evidence contradicting the income pooling hypothesis of the unitary model. On the other hand, we cannot reject the hypothesis allocations are Pareto efficient. A test based on a linearisation of the demand system also favours Pareto efficiency.