For Better or For Worse? State-Level Marital Formation and Risk Sharing
Why do some U.S. states have higher levels of marital formation than others? This paper introduces an economic model wherein a state’s representative individual may choose to marry in order to diversify his or her idiosyncratic income risk. The paper demonstrates that such a diversification motive is enhanced for some utility functions when a state’s level of undiversifiable risk becomes larger, and when a state’s initial income is lower. A test of the model’s predictions, using cross-sectional data for the 50 U.S. states, provides some suggestive evidence for a risk sharing motive in marriage formation and joint spouse labor participation. Copyright Springer Science+Business Media, Inc. 2005
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Volume (Year): 3 (2005)
Issue (Month): 4 (December)
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- Mario J Crucini & Gregory D Hess, 1999. "International and Intranational Risk Sharing," CESifo Working Paper Series 227, CESifo Group Munich.
- Ralph Chami & Gregory D. Hess, 2002.
"For Better or For Worse? State-Level Marital Formation and Risk Sharing,"
CESifo Working Paper Series
702, CESifo Group Munich.
- Ralph Chami & Gregory D. Hess, 2002. "For Better or For Worse? State Level Marital Formation and Risk Sharing," Claremont Colleges Working Papers 2002-07, Claremont Colleges.
- Lupton, J. & Smith, J.P., 1999.
"Marriage, Assets, and Savings,"
99-12, RAND - Labor and Population Program.
- Todd E. Clark & Kwanho Shin, 1998. "The sources of fluctuations within and across countries," Research Working Paper 98-04, Federal Reserve Bank of Kansas City.
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