Household Relational Contracts for Marriage, Fertility and Divorce

Matthias Fahn and Ray Rees

Discussion Papers in Economics from University of Munich, Department of Economics

Abstract: This paper applies the theory of relational contracts to a model in which a couple decides whether to marry or cohabit, how many children to have and subsequently whether to stay together or separate. We make precise the idea that cooperation in a household can be supported by self interest. Since the costs of raising children are unequally distributed between partners and children are a household public good, there is a conflict between individually optimal and efficient, i.e. surplus maximising, decisions. Side-payments are used to support cooperation but are not legally enforceable and thus have to be part of an equilibrium. This requires a stable relationship and credible punishment threats. Within this framework, we analyze the effects of policy variables such as the costs of divorce and post-divorce income payments on the interrelationships among the decisions on marriage, fertility and divorce.

Keywords: relational contracts; cohabitation; marriage; fertility; divorce (search for similar items in EconPapers)
JEL-codes: C73 D13 J12 J13 J24 (search for similar items in EconPapers)
Date: 2014-03
New Economics Papers: this item is included in nep-dem
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Citations: View citations in EconPapers (2)

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https://epub.ub.uni-muenchen.de/20834/1/Fahn_Rees_2014.pdf (application/pdf)

Related works:
Working Paper: Household Relational Contracts for Marriage, Fertility and Divorce (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenec:20834

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