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Public Goods, Transferable Utility and Divorce Laws

  • Chiappori, Pierre-André

    ()

    (Columbia University)

  • Iyigun, Murat

    ()

    (University of Colorado, Boulder)

  • Weiss, Yoram

    ()

    (Tel Aviv University)

We reconsider the well known Becker-Coase (BC) argument, according to which changes in divorce laws should not affect divorce rates, in the context of households which consume public goods in addition to private goods. For this result to hold, utility must be transferable both within marriage and upon divorce, and the marginal rate of substitution between public and private consumption needs to be invariant in marital status. We develop a model in which couples consume public goods and show that if divorce alters the way some goods are consumed (either because some goods that are public in marriage become private in divorce or because divorce affects the marginal rate of substitution between public and private goods), then the Becker-Coase theorem holds only under strict quasi-linearity. We conclude that, in general, divorce laws will influence the divorce rate, although the impact of a change in divorce laws can go in either direction.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2646.

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Length: 41 pages
Date of creation: Feb 2007
Date of revision:
Handle: RePEc:iza:izadps:dp2646
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  1. M. Browning & P. A. Chiappori, 1998. "Efficient Intra-Household Allocations: A General Characterization and Empirical Tests," Econometrica, Econometric Society, vol. 66(6), pages 1241-1278, November.
  2. Simon Clark, 1999. "Law, Property, and Marital Dissolution," ESE Discussion Papers 32, Edinburgh School of Economics, University of Edinburgh.
  3. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-67, June.
  4. Betsey Stevenson & Justin Wolfers, 2003. "Bargaining in the Shadow of the Law: Divorce Laws and Family Distress," NBER Working Papers 10175, National Bureau of Economic Research, Inc.
  5. Leora Friedberg, 1998. "Did Unilateral Divorce Raise Divorce Rates? Evidence from Panel Data," NBER Working Papers 6398, National Bureau of Economic Research, Inc.
  6. Bergstrom, Theodore C, 1999. " Systems of Benevolent Utility Functions," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(1), pages 71-100.
  7. Fella, Giulio & Manzini, Paola & Mariotti, Marco, 2002. "Does Divorce Law Matter?," IZA Discussion Papers 439, Institute for the Study of Labor (IZA).
  8. Peters, H Elizabeth, 1986. "Marriage and Divorce: Informational Constraints and Private Contracting," American Economic Review, American Economic Association, vol. 76(3), pages 437-54, June.
  9. Lundberg, S.J. & Pollak, R.A. & Wales, T.J., 1994. "Do Husbands and Wives Pool Their Resources? Evidence from U.K. Child Benefit," Working Papers 94-6, University of Washington, Department of Economics.
  10. Becker, Gary S, 1992. "Fertility and the Economy," Journal of Population Economics, Springer, vol. 5(3), pages 185-201, August.
  11. Schultz, T.P., 1990. "Testing The Neoclassical Model Of Family Labor Supply And Fertility," Papers 601, Yale - Economic Growth Center.
  12. Thomas, D., 1989. "Intra-Household Resource Allocation: An Inferential Approach," Papers 586, Yale - Economic Growth Center.
  13. Justin Wolfers, 2003. "Did Unilateral Divorce Laws Raise Divorce Rates? A Reconciliation and New Results," NBER Working Papers 10014, National Bureau of Economic Research, Inc.
  14. Imran Rasul, 2006. "Marriage Markets and Divorce Laws," Journal of Law, Economics and Organization, Oxford University Press, vol. 22(1), pages 30-69, April.
  15. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January.
  16. Pierre-André Chiappori & Yoram Weiss, 2007. "Divorce, Remarriage, and Child Support," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 37-74.
  17. Chiappori, P.A. & Ekeland, I., 2006. "The micro economics of group behavior: General characterization," Journal of Economic Theory, Elsevier, vol. 130(1), pages 1-26, September.
  18. Bergstrom, Theodore C & Cornes, Richard C, 1983. "Independence of Allocative Efficiency from Distribution in the Theory of Public Goods," Econometrica, Econometric Society, vol. 51(6), pages 1753-65, November.
  19. Niko Matouschek & Imran Rasul, 2008. "The Economics of the Marriage Contract: Theories and Evidence," Journal of Law and Economics, University of Chicago Press, vol. 51(1), pages 59-110, 02.
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