IDEAS home Printed from https://ideas.repec.org/p/eca/wpaper/2013-364446.html
   My bibliography  Save this paper

A Spouse and a House are all we need? Housing Demand, Labor Supply and Divorce over the Lifecycle

Author

Listed:
  • Bram De Rock
  • Mariia Kovaleva
  • Tom Potoms

Abstract

To analyze the impact of changes in the value of marriage on household decisions, we present a limited commitment framework of household behavior in which decisions are made regarding labor supply, divorce and housing demand over the lifecycle. We identify and estimate our structural model using exogenous variation in female labor supply and divorce rates due to the White v. White case in England. We conclude that limited commitment dampens the added worker effect, while the changes in the value of marriage due to a housing price shock have an asymmetric impact on individual welfare both across gender and marital state. We also show that tightening the credit market in different ways can lead to opposite behavior in terms of household savings and female labor supply.

Suggested Citation

  • Bram De Rock & Mariia Kovaleva & Tom Potoms, 2023. "A Spouse and a House are all we need? Housing Demand, Labor Supply and Divorce over the Lifecycle," Working Papers ECARES 2023-18, ULB -- Universite Libre de Bruxelles.
    • Handle: RePEc:eca:wpaper:2013/364446
    as

    Download full text from publisher

    File URL: https://dipot.ulb.ac.be/dspace/bitstream/2013/364446/3/2023-18-DEROCK_KOVALEVA_POTOMS-a-spouse.pdf
    File Function: Œuvre complète ou partie de l'œuvre
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Borella, Margherita & De Nardi, Mariacristina & Yang, Fang, 2018. "The aggregate implications of gender and marriage," The Journal of the Economics of Ageing, Elsevier, vol. 11(C), pages 6-26.
    2. Jeremy Lise & Shannon Seitz, 2011. "Consumption Inequality and Intra-household Allocations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 78(1), pages 328-355.
    3. Ethan Ligon & Jonathan P. Thomas & Tim Worrall, 2002. "Informal Insurance Arrangements with Limited Commitment: Theory and Evidence from Village Economies," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 69(1), pages 209-244.
    4. Orazio Attanasio & Hamish Low & Virginia Sánchez-Marcos, 2008. "Explaining Changes in Female Labor Supply in a Life-Cycle Model," American Economic Review, American Economic Association, vol. 98(4), pages 1517-1552, September.
    5. Tauchen, George, 1986. "Finite state markov-chain approximations to univariate and vector autoregressions," Economics Letters, Elsevier, vol. 20(2), pages 177-181.
    6. Richard Disney & John Gathergood, 2018. "House Prices, Wealth Effects and Labour Supply," Economica, London School of Economics and Political Science, vol. 85(339), pages 449-478, July.
    7. Greg Kaplan & Benjamin Moll & Giovanni L. Violante, 2018. "Monetary Policy According to HANK," American Economic Review, American Economic Association, vol. 108(3), pages 697-743, March.
    8. Lasse Eika & Magne Mogstad & Basit Zafar, 2019. "Educational Assortative Mating and Household Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 127(6), pages 2795-2835.
    9. Del Boca, Daniela & Lusardi, Annamaria, 2003. "Credit market constraints and labor market decisions," Labour Economics, Elsevier, vol. 10(6), pages 681-703, December.
    10. Robert F. Martin Joseph W. Gruber, 2004. "Does Housing Wealth Make Us Less Equal? The Role of Durable Goods in the Distribution of Wealth," Econometric Society 2004 North American Summer Meetings 15, Econometric Society.
    11. Pierre‐André Chiappori & Monica Costa‐Dias & Sam Crossman & Costas Meghir, 2020. "Changes in Assortative Matching and Inequality in Income: Evidence for the UK," Fiscal Studies, John Wiley & Sons, vol. 41(1), pages 39-63, March.
    12. Greg Kaplan & Giovanni L. Violante, 2014. "A Model of the Consumption Response to Fiscal Stimulus Payments," Econometrica, Econometric Society, vol. 82(4), pages 1199-1239, July.
    13. Asako Ohinata & Matteo Picchio, 2020. "Financial support for long-term elderly care and household saving behaviour," Oxford Economic Papers, Oxford University Press, vol. 72(1), pages 247-268.
    14. Richard Blundell & Luigi Pistaferri & Itay Saporta-Eksten, 2016. "Consumption Inequality and Family Labor Supply," American Economic Review, American Economic Association, vol. 106(2), pages 387-435, February.
    15. Richard Blundell & Luigi Pistaferri & Ian Preston, 2008. "Consumption Inequality and Partial Insurance," American Economic Review, American Economic Association, vol. 98(5), pages 1887-1921, December.
    16. Costas Meghir & Luigi Pistaferri, 2004. "Income Variance Dynamics and Heterogeneity," Econometrica, Econometric Society, vol. 72(1), pages 1-32, January.
    17. Leora Friedberg, 1998. "Did Unilateral Divorce Raise Divorce Rates? Evidence from Panel Data," NBER Working Papers 6398, National Bureau of Economic Research, Inc.
    18. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
    19. Orazio Attanasio & Renata Bottazzi & Hamish Low & Lars Nesheim & Matthew Wakefield, 2012. "Modelling the Demand for Housing over the Lifecycle," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 15(1), pages 1-18, January.
    20. Maurizio Mazzocco & Claudia Ruiz & Shintaro Yamaguchi, 2014. "Labor Supply and Household Dynamics," American Economic Review, American Economic Association, vol. 104(5), pages 354-359, May.
    21. Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2014. "Consumption and Labor Supply with Partial Insurance: An Analytical Framework," American Economic Review, American Economic Association, vol. 104(7), pages 2075-2126, July.
    22. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-467, June.
    23. Sekyu Choi & Arnau Valladares‐Esteban, 2020. "On households and unemployment insurance," Quantitative Economics, Econometric Society, vol. 11(1), pages 437-469, January.
    24. Patrick Bajari & Phoebe Chan & Dirk Krueger & Daniel Miller, 2013. "A Dynamic Model Of Housing Demand: Estimation And Policy Implications," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 54(2), pages 409-442, May.
    25. Jeanne Lafortune & Corinne Low, 2023. "Collateralized Marriage," American Economic Journal: Applied Economics, American Economic Association, vol. 15(4), pages 252-291, October.
    26. Chunzan Wu & Dirk Krueger, 2021. "Consumption Insurance against Wage Risk: Family Labor Supply and Optimal Progressive Income Taxation," American Economic Journal: Macroeconomics, American Economic Association, vol. 13(1), pages 79-113, January.
    27. Fang Yang, 2009. "Consumption over the Life Cycle: How Different is Housing?," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 12(3), pages 423-443, July.
    28. Orazio Attanasio & Andrew Leicester & Matthew Wakefield, 2011. "Do House Prices Drive Consumption Growth? The Coincident Cycles Of House Prices And Consumption In The Uk," Journal of the European Economic Association, European Economic Association, vol. 9(3), pages 399-435, June.
    29. Ethan Ligon & Jonathan P. Thomas & Tim Worrall, 2000. "Mutual Insurance, Individual Savings and Limited Commitment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 3(2), pages 216-246, April.
    30. Kien Dao Bui & Ejindu S. Ume, 2020. "Credit Constraints And Labor Supply: Evidence From Bank Branching Deregulation," Economic Inquiry, Western Economic Association International, vol. 58(1), pages 335-360, January.
    31. Raquel Fernández & Richard Rogerson, 2001. "Sorting and Long-Run Inequality," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(4), pages 1305-1341.
    32. Alessandra Voena, 2015. "Yours, Mine, and Ours: Do Divorce Laws Affect the Intertemporal Behavior of Married Couples?," American Economic Review, American Economic Association, vol. 105(8), pages 2295-2332, August.
    33. Renata Bottazzi & Hamish Low & Matthew Wakefield, 2007. "Why do home owners work longer hours?," IFS Working Papers W07/10, Institute for Fiscal Studies.
    34. Maurizio Mazzocco, 2007. "Household Intertemporal Behaviour: A Collective Characterization and a Test of Commitment," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 74(3), pages 857-895.
    35. Andrew Henley, 2004. "House Price Shocks, Windfall Gains and Hours of Work: British Evidence," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 66(4), pages 439-456, September.
    36. Ian Smith, 2003. "The Law and Economics of Marriage Contracts," Journal of Economic Surveys, Wiley Blackwell, vol. 17(2), pages 201-226, April.
    37. Lundberg, Shelly, 1985. "The Added Worker Effect," Journal of Labor Economics, University of Chicago Press, vol. 3(1), pages 11-37, January.
    38. Orazio Attanasio & Peter Levell & Hamish Low & Virginia Sánchez‐Marcos, 2018. "Aggregating Elasticities: Intensive and Extensive Margins of Women's Labor Supply," Econometrica, Econometric Society, vol. 86(6), pages 2049-2082, November.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Doepke, M. & Tertilt, M., 2016. "Families in Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 1789-1891, Elsevier.
    2. Theloudis, Alexandros, 2021. "Consumption inequality across heterogeneous families," European Economic Review, Elsevier, vol. 136(C).
    3. Alexandros Theloudis & Jorge Velilla & Pierre-André Chiappori & J. Ignacio Gimenéz-Nadal & José Alberto Molina, 2022. "Commitment and the Dynamics of Household Labor Supply," Working Papers 2022-042, Human Capital and Economic Opportunity Working Group.
    4. THELOUDIS Alexandros, 2018. "Wages and Family Time Allocation," LISER Working Paper Series 2018-06, Luxembourg Institute of Socio-Economic Research (LISER).
    5. Pierre André Chiappori & José Ignacio Gimenez Nadal & José Alberto Molina & Alexandros Theloudis & Jorge Velilla, 2020. "Intrahousehold Commitment and Intertemporal Labor Supply," LISER Working Paper Series 2020-11, Luxembourg Institute of Socio-Economic Research (LISER).
    6. Richard Blundell & Luigi Pistaferri & Itay Saporta-Eksten, 2016. "Consumption Inequality and Family Labor Supply," American Economic Review, American Economic Association, vol. 106(2), pages 387-435, February.
    7. Marcassa Stefania, 2013. "Divorce laws and divorce rate in the US," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 1-39, August.
    8. Fabio Blasutto, 2020. "Cohabitation vs Marriage: Mating Strategies by Education in the USA," LIDAM Discussion Papers IRES 2020023, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    9. Jeremy Lise & Ken Yamada, 2019. "Household Sharing and Commitment: Evidence from Panel Data on Individual Expenditures and Time Use," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(5), pages 2184-2219.
    10. Christian Bredemeier & Jan Gravert & Falko Juessen, 2023. "Accounting for Limited Commitment between Spouses when Estimating Labor-Supply," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 547-578, December.
    11. Margherita Borella & Mariacristina De Nardi & Fang Yang, 2023. "Are Marriage-Related Taxes and Social Security Benefits Holding Back Female Labour Supply?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(1), pages 102-131.
    12. Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2010. "The Macroeconomic Implications of Rising Wage Inequality in the United States," Journal of Political Economy, University of Chicago Press, vol. 118(4), pages 681-722, August.
    13. Koray Aktas, 2021. "Characterizing Life-Cycle Dynamics of Annual Days of Work, Wages, and Cross-Covariances," Working Papers 465, University of Milano-Bicocca, Department of Economics.
    14. Andrew Shephard, 2019. "Marriage market dynamics, gender, and the age gap," PIER Working Paper Archive 19-003, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
    15. Turon, Hélène, 2022. "The Labour Supply of Mothers," IZA Discussion Papers 15312, Institute of Labor Economics (IZA).
    16. Joseph Altonji & Disa Hynsjo & Ivan Vidangos, 2023. "Individual Earnings and Family Income: Dynamics and Distribution," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 49, pages 225-250, July.
    17. Brant Abbott & Giovanni Gallipoli & Costas Meghir & Giovanni L. Violante, 2013. "Education Policy�and Intergenerational Transfers in Equilibrium," Cowles Foundation Discussion Papers 1887, Cowles Foundation for Research in Economics, Yale University.
    18. Donni, Olivier & Molina, José Alberto, 2018. "Household Collective Models: Three Decades of Theoretical Contributions and Empirical Evidence," IZA Discussion Papers 11915, Institute of Labor Economics (IZA).
    19. Daminato, Claudio & Pistaferri, Luigi, 2020. "Family labor supply and asset returns," European Economic Review, Elsevier, vol. 124(C).
    20. Sisi Zhang, 2014. "Wage shocks, household labor supply, and income instability," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(3), pages 767-796, July.

    More about this item

    Keywords

    Limited commitment; divorce legislation; value of marriage; housing demand; labor supply; credit market policy.;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eca:wpaper:2013/364446. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Benoit Pauwels (email available below). General contact details of provider: https://edirc.repec.org/data/arulbbe.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.