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Specialization in the bargaining family

  • Raphaela Hyee
  • Julio R. Robledo

We develop a two period family decision making model in which spouses bargain over their contributions to a family public good and the distribution of private consumption. In contrast to most models in the literature, specialization within the couple emerges endogenously from the production of the public good, and is not caused by exogenous differences between the spouses. Increasing marginal benefits of labour market experience make specialization efficient, even if both spouses have equal market and household productivities on the outset. If spouses are not able to enter into a binding contract governing the distribution of private consumption in the second period, the spouse specialized in market labour cannot commit to compensate the other spouse for foregone investments in earnings power. As a consequence, this spouse may withdraw part of his/her contribution and the provision level of the household good is likely to be inefficiently low.

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File URL: http://www.nottingham.ac.uk/economics/documents/discussion-papers/10-06.pdf
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Paper provided by University of Nottingham, School of Economics in its series Discussion Papers with number 10/06.

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Handle: RePEc:not:notecp:10/06
Contact details of provider: Postal: School of Economics University of Nottingham University Park Nottingham NG7 2RD
Phone: (44) 0115 951 5620
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Web page: http://www.nottingham.ac.uk/economics/

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  1. Vagstad, S., 2001. "On Private Incentives to Aquire Household Production Skills," Norway; Department of Economics, University of Bergen 221, Department of Economics, University of Bergen.
  2. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475.
  3. Schönberg, Uta & Ludsteck, Johannes, 2007. "Maternity Leave Legislation, Female Labor Supply, and the Family Wage Gap," IZA Discussion Papers 2699, Institute for the Study of Labor (IZA).
  4. Konrad, Kai A & Lommerud, Kjell Erik, 1995. " Family Policy with Non-cooperative Families," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 581-601, December.
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