An Equilibrium Analysis of Marriage, Divorce and Risk-Sharing
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.
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University of Chicago - Population Research Center
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"The Formation and Dissolution of Families: Why Marry? Who Marries Whom ? and What Happens Upon Marriage and Divorce,"
University of Chicago - Economics Research Center
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MPIDR Working Papers
WP-2001-004, Max Planck Institute for Demographic Research, Rostock, Germany.
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The Review of Economics and Statistics,
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- Ethan Ligon & Jonathan P. Thomas & Tim Worrall, 1998. "Mutual Insurance, Individual Savings and Limited Commitment," Keele Department of Economics Discussion Papers (1995-2001) 98/14, Department of Economics, Keele University.
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