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An Assignment Model with Divorce and Remarriage

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Author Info

  • Chiappori, Pierre-André

    ()
    (Columbia University)

  • Iyigun, Murat

    ()
    (University of Colorado, Boulder)

  • Weiss, Yoram

    ()
    (Tel Aviv University)

Abstract

We develop a two-sided matching model with positive sorting, divorce and remarriage. Match quality for each couple is revealed ex post and those with poor draws divorce. Competition determines lifetime expected utilities but per-period utilities depend on the laws that govern the distribution of assets upon divorce. We discuss separately cases in which remarriage is or is not feasible and cases in which commitments are or are not made. In all cases, lifetime utilities are exactly pinned down by equilibrium (stability) requirements. Moreover, ex-post Nash bargaining and ex-ante commitment yield the same non-contingent intertemporal allocations. We then analyze the impact of changes in the property division upon divorce, considering for instance a reform that favors women. The short-term impact of the reform on the allocations of already married wives is positive. However, its long-term impact on yet unmarried women is not because such a reform generates lower utility for women within marriage which exactly offsets their higher prospective divorce settlement. When remarriage is possible, more complex effects could occur: the reform typically alters divorce probabilities and it may affect the total surplus generated by marriage, thus either increasing both spouses' welfare or decreasing both.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3892.

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Length: 47 pages
Date of creation: Dec 2008
Date of revision:
Handle: RePEc:iza:izadps:dp3892

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Keywords: matching; intra-household allocations; Becker-Coase theorem;

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References

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Citations

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Cited by:
  1. Nicholas Jacquemet & Jean-Marc Robin, 2011. "Marriage with Labor Supply," 2011 Meeting Papers 446, Society for Economic Dynamics.
  2. Alessandra Voena, 2010. "Yours, Mine and Ours: Do Divorce Laws affect the Intertemporal Behavior of Married Couples??," 2010 Meeting Papers 1329, Society for Economic Dynamics.
  3. Hiller, Victor & Recoules, Magali, 2013. "Changes in divorce patterns: Culture and the law," International Review of Law and Economics, Elsevier, vol. 34(C), pages 77-87.
  4. Jeanne Lafortune & Pierre-Andre Chiappori & Murat Iyigun & Yoram Weiss, 2012. "Changing the Rules Midway: The Impact of Granting Alimony Rights on Existing and Newly-Formed Partnerships," Documentos de Trabajo 424, Instituto de Economia. Pontificia Universidad Católica de Chile..
  5. Pierre-Andre Chiappori & Murat Iyigun & Yoram Weiss, 2006. "Investment in Schooling and the Marriage Market," DEGIT Conference Papers c011_034, DEGIT, Dynamics, Economic Growth, and International Trade.
  6. Alessandra Voena, 2011. "Yours, Mine and Ours: Do Divorce Laws Affect the Intertemporal Behavior of Married Couples?," Discussion Papers 10-022, Stanford Institute for Economic Policy Research.
  7. Nicolas Jacquemet & Jean-Marc Robin, 2011. "Marriage with Labor Supply," Sciences Po publications info:hdl:2441/eu4vqp9ompq, Sciences Po.

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