Building the Family Nest: A Collective Household Model with Competing Pre-Marital Investments and Spousal Matching

Randall Walsh and Murat Iyigun

No 168, 2004 Meeting Papers from Society for Economic Dynamics

Abstract: We develop a model of the household in which spousal incomes are determined by pre-marital investments, the marriage market is charaterized by assortative matching, and endogenously-determined sharing rules form the basis of intra-household allocations. By incorporating pre-marital investments and spousal matching into the collective household model, we are able to (a) establish the welfare implications of the collective model for pre-marital choices and spousal matching and (b) identify the fundamental determinants of endogenously-determined and maritally sustainable intra-marital sharing rules. In particular, we find that all sharing rules along the assortative order support unconditionally efficient outcomes where both pre-marital investments and intra-household allocations are efficient. We also show that, for each couple, the marriage market generates a unique and maritally sustainable sharing rule that is a function of the distribution of pre-marital endowments and the sex ratios in the market.

Keywords: The Collective Model; Marriage; Bargaining; Household Labor Supply (search for similar items in EconPapers)
JEL-codes: C78 D61 D70 (search for similar items in EconPapers)
Date: 2004
New Economics Papers: this item is included in nep-dge
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Citations: View citations in EconPapers (11)

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Persistent link: https://EconPapers.repec.org/RePEc:red:sed004:168

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