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An Equilibrium Analysis of Marriage, Divorce and Risk-Sharing

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  • Anderberg, Dan

    (University of Stirling)

Abstract

This paper considers marriage, divorce and reciprocity-based cooperation by couples 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 differing not only in family formation and dissolution patterns but also in the role of marriage in providing informal insurance. Publicly provided earnings-insurance, despite potential equilibrium multiplicity, is shown to affect family formation and financial cooperation monotonically.

Suggested Citation

  • Anderberg, Dan, 2002. "An Equilibrium Analysis of Marriage, Divorce and Risk-Sharing," Royal Economic Society Annual Conference 2002 6, Royal Economic Society.
  • Handle: RePEc:ecj:ac2002:6
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    References listed on IDEAS

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    1. S. Rao Aiyagari & Jeremy Greenwood & Nezih Guner, 2000. "On the State of the Union," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 213-244, April.
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    3. Yoram Weiss, "undated". "The Formation and Dissolution of Families: Why Marry? Who Marries Whom? And What Happens Upon Marriage and Divorce," University of Chicago - Population Research Center 92-7a, Chicago - Population Research Center.
    4. Andrew D. Foster & Mark R. Rosenzweig, 2001. "Imperfect Commitment, Altruism, And The Family: Evidence From Transfer Behavior In Low-Income Rural Areas," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 389-407, August.
    5. Arnstein Aassve & Simon Burgess & Andrew Chesher & Carol Propper, 2002. "Transitions from home to marriage of young Americans," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 17(1), pages 1-23.
    6. Weiss, Yoram & Willis, Robert J, 1997. "Match Quality, New Information, and Marital Dissolution," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 293-329, January.
    7. Becker, Gary S & Landes, Elisabeth M & Michael, Robert T, 1977. "An Economic Analysis of Marital Instability," Journal of Political Economy, University of Chicago Press, vol. 85(6), pages 1141-1187, December.
    8. Coate, S. & Ravallion, M., 1989. "Reciprocity Without Commitment: Characterization and Performance of Informal Risk-Sharing Arrangements," Papers 96, Warwick - Development Economics Research Centre.
    9. Attanasio, Orazio & Rios-Rull, Jose-Victor, 2000. "Consumption smoothing in island economies: Can public insurance reduce welfare?," European Economic Review, Elsevier, vol. 44(7), pages 1225-1258, June.
    10. Becker, Gary S, 1973. "A Theory of Marriage: Part I," Journal of Political Economy, University of Chicago Press, vol. 81(4), pages 813-846, July-Aug..
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    Cited by:

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

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