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Household Relational Contracts for Marriage, Fertility and Divorce

  • Matthias Fahn
  • Ray Rees
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    This paper applies the theory of relational contracts to a model in which a couple decides whether to marry or cohabit, how many children to have and subsequently whether to stay together or separate. We make precise the idea that cooperation in a household can be supported by self interest. Since the costs of raising children are unequally distributed among partners, there is a potential conflict between individually optimal and efficient, i.e. surplus maximizing, decisions. Side-payments are used to support cooperation but are not legally enforceable and thus have to be part of an equilibrium. This requires a stable relationship and credible punishment threats. Within this relational contracts framework, we analyze the effects of policy variables such as rights of access to children post-separation and wealth division/alimony rules, as well as the legal costs of divorce, on the interrelationships among the decisions on marriage, fertility and divorce.

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    File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2011/wp-cesifo-2011-11/cesifo1_wp3655.pdf
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    Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3655.

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    Date of creation: 2011
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    Handle: RePEc:ces:ceswps:_3655
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    1. Alesina, Alberto F & Giuliano, Paola & Nunn, Nathan, 2011. "Fertility and the Plough," CEPR Discussion Papers 8261, C.E.P.R. Discussion Papers.
    2. Konrad, Kai A. & Lommerud, Kjell Erik, 1996. "The Bargaining Family Revisited," CEPR Discussion Papers 1312, C.E.P.R. Discussion Papers.
    3. Betsey Stevenson, 2007. "The Impact of Divorce Laws on Marriage-Specific Capital," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 75-94.
    4. Stevenson, Betsey & Wolfers, Justin, 2007. "Marriage and Divorce: Changes and their Driving Forces," IZA Discussion Papers 2602, Institute for the Study of Labor (IZA).
    5. Cahit Guven & Claudia Senik & Holger Stichnoth, 2010. "You Can't Be Happier Than Your Wife: Happiness Gaps and Divorce," SOEPpapers on Multidisciplinary Panel Data Research 261, DIW Berlin, The German Socio-Economic Panel (SOEP).
    6. repec:cup:cbooks:9780521887878 is not listed on IDEAS
    7. Monika Schnitzer, 1994. "The Interaction of Explicit and Implicit Contracts," Discussion Paper Serie A 452, University of Bonn, Germany.
    8. Lommerud, Kjell Erik, 1989. "Marital Division of Labor with Risk of Divorce: The Role of "Voice" Enforcement of Contracts," Journal of Labor Economics, University of Chicago Press, vol. 7(1), pages 113-27, January.
    9. Jonathan Levin, 2000. "Relational Incentive Contracts," Working Papers 01002, Stanford University, Department of Economics.
    10. Matthias Doepke, 2002. "Child Mortality and Fertility Decline: Does the Barro-Becker Model Fit the Facts?," UCLA Economics Working Papers 824, UCLA Department of Economics.
    11. Bellido, Héctor & Marcén, Miriam, 2011. "Divorce laws and fertility decisions," MPRA Paper 30243, University Library of Munich, Germany.
    12. repec:cup:cbooks:9780521716284 is not listed on IDEAS
    13. Rasul, Imran, 2008. "Household bargaining over fertility: Theory and evidence from Malaysia," Journal of Development Economics, Elsevier, vol. 86(2), pages 215-241, June.
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