Will the possibility of divorce discourage marriage-specific investment?
Becker et al. (1977) argue that the possibility of divorce discourages the accumulation of marriage-specific capital. Their argument has been confirmed by empirical studies that assume labor supply and marriage-specific investment are negatively related. We argue that since it is possible for individuals to increase marriage-specific investment without changing labor supply simultaneously, the conventional approach using the change in labor supply to infer to the change in marriage-specific investment may lead to a biased conclusion. This paper incorporates dynamic and stochastic optimal control approach into a material-spiritual goods framework. The model disentangles marriage-specific investment form other marital effort, and demonstrates that only part of effort devoted to marriage is marriage-specific investment and only the individuals who have spiritual and emotional needs make marriage-specific investment. Marriage-specific investment is highest in marriages where individuals behave altruistically, lower in marriages where individuals behave selfishly, and zero in marriages where spiritual goods are not valued. The model also implies a result that is contrary to conventional wisdom: the possibility of divorce does not always discourage, and may even encourage, marriage-specific investment. Since the impact of the divorce risk on marriage-specific investment depends on three factors: time preference, the level of the risk and the correlation between the divorce risk and marriage-specific capital, it could be optimal for an individual to invest more under uncertainty than in the corresponding risk-free world if he or she can well understand and predict his or her partner's spiritual needs. The key factor in the decision process is the confidence in predicting the partner's spiritual needs.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 39 (2010)
Issue (Month): 2 (April)
|Contact details of provider:|| Web page: http://www.elsevier.com/locate/inca/620175 |
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Clarke, Harry R. & Reed, William J., 1994. "Consumption/pollution tradeoffs in an environment vulnerable to pollution-related catastrophic collapse," Journal of Economic Dynamics and Control, Elsevier, vol. 18(5), pages 991-1010, September.
- Becker, Gary S, 1974.
"A Theory of Marriage: Part II,"
Journal of Political Economy,
University of Chicago Press, vol. 82(2), pages S11-S26, Part II, .
- Chiappori, Pierre-André & Fortin, Bernard & Lacroix, Guy, 2001.
"Marriage Market, Divorce Legislation and Household Labor Supply,"
Cahiers de recherche
0103, Université Laval - Département d'économique.
- Pierre-Andre Chiappori & Bernard Fortin & Guy Lacroix, 2002. "Marriage Market, Divorce Legislation, and Household Labor Supply," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 37-72, February.
- Pierre-André Chiappori & Bernard Fortin & Guy Lacroix, 2001. "Marriage Market, Divorce Legislation and Household Labor Supply," CIRANO Working Papers 2001s-16, CIRANO.
- Martin Browning & P.A. Chiappori, 1996.
"Efficient Intra-Household Allocations - A General Characterization and Empirical Tests,"
96-10, University of Copenhagen. Department of Economics.
- 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.
- Browning, M. & Chiappori, P.A., 1994. "Efficient Intra-Household allocations: A General Characterization and Empirical Tests," DELTA Working Papers 94-16, DELTA (Ecole normale supérieure).
- Martin Browning & Pierre-Andre Chiappori, 1994. "Efficient Intra-Household Allocations: a General Characterization and Empirical Tests," Department of Economics Working Papers 1994-02, McMaster University.
- Neil Bruce & Michael Waldman, 1986.
"The Rotten-Kid Theorem Meets the Samaritan's Dilemma,"
650, Queen's University, Department of Economics.
- Bruce, Neil & Waldman, Michael, 1990. "The Rotten-Kid Theorem Meets the Samaritan's Dilemma," The Quarterly Journal of Economics, MIT Press, vol. 105(1), pages 155-65, February.
- Neil Bruce & Michael Waldman, 1986. "The Rotten-Kid Theorem Meets the Samaritan's Dilemma," UCLA Economics Working Papers 402, UCLA Department of Economics.
- Bourguignon, F. & Chiappori, P-A., 1991.
"Collective Models of Household Behaviour: An Introduction,"
DELTA Working Papers
91-29, DELTA (Ecole normale supérieure).
- Bourguignon, Francois & Chiappori, Pierre-Andre, 1992. "Collective models of household behavior : An introduction," European Economic Review, Elsevier, vol. 36(2-3), pages 355-364, April.
- Leora Friedberg, 1998. "Did Unilateral Divorce Raise Divorce Rates? Evidence from Panel Data," NBER Working Papers 6398, National Bureau of Economic Research, Inc.
- Peter Kooreman & Arie Kapteyn, 1990.
"On the Empirical Implementation of Some Game Theoretic Models of Household Labor Supply,"
Journal of Human Resources,
University of Wisconsin Press, vol. 25(4), pages 584-598.
- Kooreman, P. & Kapteyn, A.J., 1989. "On the empirical implementation of some game theoretic models of household labor supply," Discussion Paper 1989-56, Tilburg University, Center for Economic Research.
- Konrad, Kai A & Lommerud, Kjell Erik, 1995. " Family Policy with Non-cooperative Families," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 581-601, December.
- repec:ner:tilbur:urn:nbn:nl:ui:12-364364 is not listed on IDEAS
- Peters, H Elizabeth, 1986. "Marriage and Divorce: Informational Constraints and Private Contracting," American Economic Review, American Economic Association, vol. 76(3), pages 437-54, June.
- Johnson, William R & Skinner, Jonathan, 1986. "Labor Supply and Marital Separation," American Economic Review, American Economic Association, vol. 76(3), pages 455-69, June.
- Becker, Gary S & Landes, Elisabeth M & Michael, Robert T, 1977. "An Economic Analysis of Marital Instability," Journal of Political Economy, University of Chicago Press, vol. 85(6), pages 1141-87, December.
- Kooreman, P. & Kapteyn, A.J., 1990. "On the empirical implementation of some game theoretic models of household labor supply," Other publications TiSEM 4c9bb2ae-f1e6-4924-8cae-3, School of Economics and Management.
- Parkman, Allen M, 1992. "Unilateral Divorce and the Labor-Force Participation Rate of Married Women, Revisited," American Economic Review, American Economic Association, vol. 82(3), pages 671-78, June.
- Allen, Douglas W, 1992. "Marriage and Divorce: Comment," American Economic Review, American Economic Association, vol. 82(3), pages 679-85, June.
- Gary S. Becker, 1981. "A Treatise on the Family," NBER Books, National Bureau of Economic Research, Inc, number beck81-1, January.
When requesting a correction, please mention this item's handle: RePEc:eee:soceco:v:39:y:2010:i:2:p:251-257. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
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 references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.