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On the State of the Union

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  • S. Rao Aiyagari
  • Jeremy Greenwood
  • Nezih Guner

Abstract

An overlapping generations model of marriage and divorce is constructed to analyze family structure and intergenerational mobility. Agents differ by sex, marital status, and human capital. Single agents meet in a marriage market and decide whether to accept or reject proposals to wed. Married couples must decide whether to separate or not. Parents invested in their children depending on their wherewithal. A simulated version of the theoretical prototype can generate an equilibrium with a significant number of female-headed families and a high degree of persistence in income across generations. To illustrate the model's mechanics, the effects of two anti-poverty policies, namely child support and welfare, are investigated.
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Suggested Citation

  • S. Rao Aiyagari & Jeremy Greenwood & Nezih Guner, 2000. "On the State of the Union," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 213-244, April.
    • Handle: RePEc:ucp:jpolec:v:108:y:2000:i:2:p:213-244
    DOI: 10.1086/262117
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    References listed on IDEAS

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    4. Ken Burdett & Randall Wright, 1998. "Two-Sided Search with Nontransferable Utility," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 1(1), pages 220-245, January.
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    More about this item

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure

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