Savings and Economies of Marriage: Intra-Marriage Financial Distributions as Determinants of Savings
This paper presents an inter-temporal model of individual savings behavior with intra-marriage financial distributions and uncertainty about marriage and divorce. Spouses paying these distributions experience diseconomies of marriage; the spouses who receive them benefit from economies of marriage. We show that higher likelihoods of marriage and divorce are associated with lower (higher) personal savings rates in the presence of diseconomies (economies) of marriage. These results hint at the possibility that structural patterns of social behavior may be at the root of the lack of effectiveness of conventional policy instruments, such as tax incentives, to promote personal savings.
|Date of creation:||15 Jul 2013|
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