 Love and taxes - and matching institutionsKai Konrad and Kjell Lommerud () Discussion Papers, Research Unit: Market Processes and Governance from WZB Berlin Social Science Center Abstract: We study a setting with search frictions in the marriage market and with incomplete contracting inside the family. Everyone prefers a partner that has high income and is a perfect emotional match, but compromises must often be struck. A high income earner may abstain from marrying a low-income earner even though they would be a perfect match emotionally, because the highincome earner may dislike the implicit income redistribution implied by the marriage. Redistributive income taxation may ease this problem. Income matching institutions that secure that people largely from the same income groups meet each other can substitute for redistribution, so that optimal redistribution is reduced. We also introduce a divorce option. Redistributive taxation is shown both to further and stabilize marriage. Keywords: Marriage; optimal taxation; emotional rents; love; incomplete contracts; assortative mating; divorce (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:zbw:wzbmpg:spii200804 Access Statistics for this paper More papers in Discussion Papers, Research Unit: Market Processes and Governance from WZB Berlin Social Science Center Contact information at EDIRC. |
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