How Bargaining in Marriage drives Marriage Market Equilibrium

Robert Pollak

No 24000, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper investigates marriage market equilibrium under the assumption that Bargaining In Marriage (BIM) determines allocation within marriage. Prospective spouses, when they meet in the marriage market, are assumed to foresee the outcome of BIM and rank prospective spouses on the basis of the utilities they foresee emerging from BIM. Under these assumptions, the marriage market is the first stage of a multi-stage game – in the simplest case, a two-stage game – that must be solved by backwards induction. The marriage market determines both who marries and, among those who marry, who marries whom. Bargaining in the second and any subsequent stages determines allocation within each marriage. When BIM determines allocation within marriage, the appropriate framework for analyzing marriage market equilibrium is the Gale-Shapley matching model. In contrast, the standard model of marriage market equilibrium assumes that prospective spouses make Binding Agreements in the Marriage Market (BAMM) that determine allocation within marriage. If we assume BAMM and transferable utility, then the appropriate framework for analyzing marriage market equilibrium is the Koopmans-Beckmann-Shapley-Shubik assignment model. BIM and BAMM have different implications not only for allocation within marriage but also for who marries, who marries whom, the number of marriages, and the Pareto efficiency of marriage market equilibrium.

JEL-codes: D1 J12 K36 (search for similar items in EconPapers)
Date: 2017-11
New Economics Papers: this item is included in nep-dem, nep-gth, nep-law and nep-upt
Note: CH ED LS
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Published as Robert A. Pollak, "How Bargaining in Marriage Drives Marriage Market Equilibrium," Journal of Labor Economics 37, no. 1 (January 2019): 297-321.

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Related works:
Journal Article: How Bargaining in Marriage Drives Marriage Market Equilibrium (2019)
Working Paper: How Bargaining in Marriage Drives Marriage Market Equilibrium (2018)
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