For Better or For Worse? State Level Marital Formation and Risk Sharing

Ralph Chami () and Gregory Dawson Hess ()

Claremont Colleges Working Papers from Claremont Colleges

Abstract: Why do some U.S. states have higher levels of marital formation than others? This paper introduces an economic model wherein a state's representative individual may choose to marry in order to diversify his or her idiosyncratic income risk. The paper demonstrates that such a diversification motive is enhanced for some utility functions when a state's level of undiversifiable risk becomes larger, and when a state's initial income and growth rate is lower. A test of the model's predictions, using cross-sectional data for the 50 U.S. states, suggests that there is broad support for a risk sharing motive for marriage as well as a precautionary attitude towards risk.

Keywords: Consumption Insurance; Marriage (search for similar items in EconPapers)
JEL-codes: J12 D1 D21 (search for similar items in EconPapers)
Date: 2002-07
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Related works:
Journal Article: For Better or For Worse? State-Level Marital Formation and Risk Sharing (2005)
Working Paper: For Better or For Worse? State-Level Marital Formation and Risk Sharing (2002)
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Persistent link: http://EconPapers.repec.org/RePEc:clm:clmeco:2002-07

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