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

Ralph Chami and Gregory Hess

Review of Economics of the Household, 2005, vol. 3, issue 4, 367-385

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 is lower. A test of the model’s predictions, using cross-sectional data for the 50 U.S. states, provides some suggestive evidence for a risk sharing motive in marriage formation and joint spouse labor participation. Copyright Springer Science+Business Media, Inc. 2005

Keywords: consumption insurance; marriage; J12; D1; E21 (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (11)

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DOI: 10.1007/s11150-005-4940-2

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