Is Sex Ratio a Valid Distribution Factor in a Collective Model?

A distribution factor generates exogenous variation in household members’ bargaining weights, and therefore, it helps identify a collective model. We derive testable hypotheses of the exogeneity of a single distribution factor in a general collective model. Next, we test whether the local sex ratio—a popular distribution factor in the literature— satisfies the exclusion restriction required of distribution factors using Japanese and Australian data. We reject the exclusion restriction for both countries. Evidence suggests that this is due to a dependency between the local sex ratio and local gender norms