IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp2646.html
   My bibliography  Save this paper

Public Goods, Transferable Utility and Divorce Laws

Author

Listed:
  • Chiappori, Pierre-André

    (Columbia University)

  • Iyigun, Murat

    (University of Colorado, Boulder)

  • Weiss, Yoram

    (Tel Aviv University)

Abstract

We reconsider the well known Becker-Coase (BC) argument, according to which changes in divorce laws should not affect divorce rates, in the context of households which consume public goods in addition to private goods. For this result to hold, utility must be transferable both within marriage and upon divorce, and the marginal rate of substitution between public and private consumption needs to be invariant in marital status. We develop a model in which couples consume public goods and show that if divorce alters the way some goods are consumed (either because some goods that are public in marriage become private in divorce or because divorce affects the marginal rate of substitution between public and private goods), then the Becker-Coase theorem holds only under strict quasi-linearity. We conclude that, in general, divorce laws will influence the divorce rate, although the impact of a change in divorce laws can go in either direction.

Suggested Citation

  • Chiappori, Pierre-André & Iyigun, Murat & Weiss, Yoram, 2007. "Public Goods, Transferable Utility and Divorce Laws," IZA Discussion Papers 2646, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp2646
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp2646.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. M. Browning & P. A. Chiappori, 1998. "Efficient Intra-Household Allocations: A General Characterization and Empirical Tests," Econometrica, Econometric Society, vol. 66(6), pages 1241-1278, November.
    2. Peters, H Elizabeth, 1986. "Marriage and Divorce: Informational Constraints and Private Contracting," American Economic Review, American Economic Association, vol. 76(3), pages 437-454, June.
    3. Duncan Thomas, 1990. "Intra-Household Resource Allocation: An Inferential Approach," Journal of Human Resources, University of Wisconsin Press, vol. 25(4), pages 635-664.
    4. François Bourguignon & Martin Browning & Pierre-André Chiappori & Valérie Lechene, 1993. "Intra Household Allocation of Consumption: A Model and some Evidence from French Data," Annals of Economics and Statistics, GENES, issue 29, pages 137-156.
    5. R. H. Coase, 2013. "The Problem of Social Cost," Journal of Law and Economics, University of Chicago Press, vol. 56(4), pages 837-877.
    6. Bergstrom, Theodore C & Cornes, Richard C, 1983. "Independence of Allocative Efficiency from Distribution in the Theory of Public Goods," Econometrica, Econometric Society, vol. 51(6), pages 1753-1765, November.
    7. Becker, Gary S, 1992. "Fertility and the Economy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 5(3), pages 185-201, August.
    8. Lundberg, S.J. & Pollak, R.A. & Wales, T.J., 1994. "Do Husbands and Wives Pool Their Resources? Evidence from U.K. Child Benefit," Discussion Papers in Economics at the University of Washington 94-6, Department of Economics at the University of Washington.
    9. Betsey Stevenson & Justin Wolfers, 2006. "Bargaining in the Shadow of the Law: Divorce Laws and Family Distress," The Quarterly Journal of Economics, Oxford University Press, vol. 121(1), pages 267-288.
    10. Leora Friedberg, 1998. "Did Unilateral Divorce Raise Divorce Rates? Evidence from Panel Data," NBER Working Papers 6398, National Bureau of Economic Research, Inc.
    11. Pierre-André Chiappori & Yoram Weiss, 2007. "Divorce, Remarriage, and Child Support," Journal of Labor Economics, University of Chicago Press, vol. 25(1), pages 37-74.
    12. Giulio Fella & Paola Manzini & Marco Mariotti, 2004. "Does Divorce Law Matter?," Journal of the European Economic Association, MIT Press, vol. 2(4), pages 607-633, June.
    13. Clark, Simon, 1999. "Law, Property, and Marital Dissolution," Economic Journal, Royal Economic Society, vol. 109(454), pages 41-54, March.
    14. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
    15. Theodore C. Bergstrom, 1999. "Systems of Benevolent Utility Functions," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(1), pages 71-100, January.
    16. Chiappori, P.A. & Ekeland, I., 2006. "The micro economics of group behavior: General characterization," Journal of Economic Theory, Elsevier, vol. 130(1), pages 1-26, September.
    17. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-467, June.
    18. Paul A. Samuelson, 1950. "Evaluation Of Real National Income," Oxford Economic Papers, Oxford University Press, vol. 2(1), pages 1-29.
    19. Zelder, Martin, 1993. "Inefficient Dissolutions as a Consequence of Public Goods: The Case of No-Fault Divorce," The Journal of Legal Studies, University of Chicago Press, vol. 22(2), pages 503-520, June.
    20. Imran Rasul, 2006. "Marriage Markets and Divorce Laws," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 22(1), pages 30-69, April.
    21. Peter A. Diamond & Eric Maskin, 1979. "An Equilibrium Analysis of Search and Breach of Contract, I: Steady States," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 282-316, Spring.
    22. repec:adr:anecst:y:1993:i:29:p:07 is not listed on IDEAS
    23. Niko Matouschek & Imran Rasul, 2008. "The Economics of the Marriage Contract: Theories and Evidence," Journal of Law and Economics, University of Chicago Press, vol. 51(1), pages 59-110, February.
    24. Justin Wolfers, 2006. "Did Unilateral Divorce Laws Raise Divorce Rates? A Reconciliation and New Results," American Economic Review, American Economic Association, vol. 96(5), pages 1802-1820, December.
    25. T. Paul Schultz, 1990. "Testing the Neoclassical Model of Family Labor Supply and Fertility," Journal of Human Resources, University of Wisconsin Press, vol. 25(4), pages 599-634.
    26. Bergstrom, Theodore C, 1989. "A Fresh Look at the Rotten Kid Theorem--and Other Household Mysteries," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1138-1159, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Thorsten Kneip & Gerrit Bauer & Steffen Reinhold, 2014. "Direct and Indirect Effects of Unilateral Divorce Law on Marital Stability," Demography, Springer;Population Association of America (PAA), vol. 51(6), pages 2103-2126, December.
    2. Alessandra Voena, 2015. "Yours, Mine, and Ours: Do Divorce Laws Affect the Intertemporal Behavior of Married Couples?," American Economic Review, American Economic Association, vol. 105(8), pages 2295-2332, August.
    3. repec:esx:essedp:724 is not listed on IDEAS
    4. Sun, Ang & Zhao, Yaohui, 2016. "Divorce, abortion, and the child sex ratio: The impact of divorce reform in China," Journal of Development Economics, Elsevier, vol. 120(C), pages 53-69.
    5. René Böheim & Mario Francesconi & Martin Halla, 2012. "Does custody law affect family behavior in and out of marriage?," Economics working papers 2012-12, Department of Economics, Johannes Kepler University Linz, Austria.
    6. Chiappori, Pierre-André & Iyigun, Murat & Weiss, Yoram, 2008. "An Assignment Model with Divorce and Remarriage," IZA Discussion Papers 3892, Institute of Labor Economics (IZA).
    7. Fisher, H., 2011. "Divorce Property Division and the Decision to Marry or Cohabit," Cambridge Working Papers in Economics 1101, Faculty of Economics, University of Cambridge.
    8. Elisabeth Gugl & Linda Welling, 2017. "Efficiency of Family Bargaining Models with Renegotiation: The Role of Transferable Utility across Periods," Studies in Microeconomics, , vol. 5(1), pages 53-83, June.
    9. Sun, Ang & Zhao, Yaohui, 2014. "Divorce, Abortion and Children's Sex Ratio: The Impact of Divorce Reform in China," IZA Discussion Papers 8230, Institute of Labor Economics (IZA).
    10. Francesconi, Marco & Rainer, Helmut & van der Klaauw, Wilbert, 2008. "Unintended Consequences of Welfare Reform: The Case of Divorced Parents," IZA Discussion Papers 3891, Institute of Labor Economics (IZA).
    11. Kristin Mammen, 2008. "The Long-Term Effects of the Divorce Revolution: Health, Wealth, and Labor Supply," Working Papers, Center for Retirement Research at Boston College wp2008-22, Center for Retirement Research, revised Nov 2008.
    12. Pierre‐Andre Chiappori & Murat Iyigun & Jeanne Lafortune & Yoram Weiss, 2017. "Changing the Rules Midway: The Impact of Granting Alimony Rights on Existing and Newly Formed Partnerships," Economic Journal, Royal Economic Society, vol. 127(604), pages 1874-1905, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Chiappori, Pierre-André & Iyigun, Murat & Weiss, Yoram, 2008. "An Assignment Model with Divorce and Remarriage," IZA Discussion Papers 3892, Institute of Labor Economics (IZA).
    2. Chiappori, Pierre-André & Iyigun, Murat & Weiss, Yoram, 2008. "An Assignment Model with Divorce and Remarriage," IZA Discussion Papers 3892, Institute of Labor Economics (IZA).
    3. Chiappori, Pierre-André & Donni, Olivier, 2009. "Non-unitary Models of Household Behavior: A Survey of the Literature," IZA Discussion Papers 4603, Institute of Labor Economics (IZA).
    4. Akiko Maruyama & Takashi Shimizu & Kazuhiro Yamamoto, 2009. "Exit and Voice in a Marriage Market," Discussion Papers in Economics and Business 09-04, Osaka University, Graduate School of Economics.
    5. Steven G. Medema, 2020. "The Coase Theorem at Sixty," Journal of Economic Literature, American Economic Association, vol. 58(4), pages 1045-1128, December.
    6. Marcassa Stefania, 2013. "Divorce laws and divorce rate in the US," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 1-39, August.
    7. John Douglas Skåtun, 2017. "Bargaining on your Spouse: Coasean and Non-Coasean Behaviour Within Marriage," Journal of Family and Economic Issues, Springer, vol. 38(2), pages 263-278, June.
    8. Smith, Ian, 2007. "Property division on divorce with inequity aversion," International Review of Law and Economics, Elsevier, vol. 27(2), pages 111-128.
    9. Lee, Jungmin, 2004. "Observable and Unobservable Household Sharing Rules: Evidence from Young Couples' Pocket Money," IZA Discussion Papers 1250, Institute of Labor Economics (IZA).
    10. Xu, Zeyu, 2007. "A survey on intra-household models and evidence," MPRA Paper 3763, University Library of Munich, Germany.
    11. Pierre‐Andre Chiappori & Murat Iyigun & Jeanne Lafortune & Yoram Weiss, 2017. "Changing the Rules Midway: The Impact of Granting Alimony Rights on Existing and Newly Formed Partnerships," Economic Journal, Royal Economic Society, vol. 127(604), pages 1874-1905, September.
    12. Brishti Guha, 2012. "Divorce Laws, Sex Ratios and the Marriage Market," Working Papers 19-2012, Singapore Management University, School of Economics.
    13. Thorsten Kneip & Gerrit Bauer & Steffen Reinhold, 2014. "Direct and Indirect Effects of Unilateral Divorce Law on Marital Stability," Demography, Springer;Population Association of America (PAA), vol. 51(6), pages 2103-2126, December.
    14. Rubalcava, L. & Thomas, D., 2000. "Family Bargaining and Welfare," Papers 00-10, RAND - Labor and Population Program.
    15. Hisahiro Naito, 2015. "Provision of Household Public Goods and the Household Income Distribution," Tsukuba Economics Working Papers 2015-004, Faculty of Humanities and Social Sciences, University of Tsukuba.
    16. Chiappori, Pierre-André & Gimenez-Nadal, José Ignacio & Molina, José Alberto & Theloudis, Alexandros & Velilla, Jorge, 2020. "Intrahousehold Commitment and Intertemporal Labor Supply," IZA Discussion Papers 13545, Institute of Labor Economics (IZA).
    17. Olivier Bargain & Miriam Beblo & Denis Beninger & Richard Blundell & Raquel Carrasco & Maria-Concetta Chiuri & François Laisney & Valérie Lechene & Nicolas Moreau & Michal Myck & Javier Ruiz-Castillo , 2006. "Does the Representation of Household Behavior Matter for Welfare Analysis of Tax-benefit Policies? An Introduction," Review of Economics of the Household, Springer, vol. 4(2), pages 99-111, June.
    18. Gustavo J. Bobonis, 2011. "The Impact of Conditional Cash Transfers on Marriage and Divorce," Economic Development and Cultural Change, University of Chicago Press, vol. 59(2), pages 281-312.
    19. Stephanie Lluis & Yazhuo (Annie) Pan, 2018. "Marital Property Laws and Women’s Labour Supply," Working Papers 1809, University of Waterloo, Department of Economics, revised 12 Nov 2018.
    20. Chiappori, Pierre-Andre, 2010. "Testable implications of transferable utility," Journal of Economic Theory, Elsevier, vol. 145(3), pages 1302-1317, May.

    More about this item

    Keywords

    Becker-Coase theorem; collective model; divorce rates;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp2646. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.