On the State of the Union

S. Rao Aiyagari, Jeremy Greenwood () and Nezih Guner ()

No 462, RCER Working Papers from University of Rochester - Center for Economic Research (RCER)

Abstract: An overlapping generations model of marriage and divorce is constructed to analyze family structure and intergenerational mobility. Agents differ by sex, marital status, and human capital. Single agents meet in a marriage market and decide whether to accept or reject proposals to wed. Married couples must decide whether to separate or not. Parents invested in their children depending on their wherewithal. A simulated version of the theoretical prototype can generate an equilibrium with a significant number of female-headed families and a high degree of persistence in income across generations. To illustrate the model's mechanics, the effects of two anti-poverty policies, namely child support and welfare, are investigated.

Keywords: MARRIAGE; DIVORCE; PUBLIC POLICY; ECONOMIC MODELS (search for similar items in EconPapers)
JEL-codes: D1 D58 I38 J12 (search for similar items in EconPapers)
Date: 1999
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