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An Equilibrium Analysis of Marriage, Divorce and Risk-Sharing

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  • Dan Anderberg

Abstract

This paper considers family formation and reciprocity-based cooperation in the form of sharing of earnings-risk. While risk sharing is one benefit to marriage it is also limited by divorce risk. With search in the marriage market there may be multiple equilibria diering not only in divorce rates but also in the role of marriage in providing informal insurance. Publicly provided insurance, despite potential equilibrium multiplicity, is shown to aect family formation and financial cooperation monotonically. Some aspects of the model are then tested using international survey data and a bivariate probit model with sample selection.

Suggested Citation

  • Dan Anderberg, 2001. "An Equilibrium Analysis of Marriage, Divorce and Risk-Sharing," CESifo Working Paper Series 555, CESifo.
    • Handle: RePEc:ces:ceswps:_555
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    Cited by:

    1. Kai A. Konrad & Kjell Erik Lommerud, 2010. "Love and taxes – and matching institutions," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 43(3), pages 919-940, August.
    2. Katarina Nordblom, 2004. "Cohabitation and Marriage in a Risky World," Review of Economics of the Household, Springer, vol. 2(3), pages 325-340, April.

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    Keywords

    Marriage; divorce; risk-sharing;
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