Minimal Household Units: A New Approach to the Analysis of Household Formation

In this paper a new method for the analysis of household formation and the composition of households is described. The components, or building blocks, which combine to form households are identified and these have been called ‘minimal household units’. The focus of the analysis is on whether a minimal household unit sets up as a separate household or, if not, with whom it is shared. An economic theory of household formation is outlined, and a probit model is used to guide the estimation of the effects of economic and demographic characteristics of the minimal household unit on the probability of being a separate household, economic factors, such as the unit's income, and other social and demographic characteristics of the unit's members are shown to have a significant influence on the probability of its being a separate household.