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Marriage and Cohabitation

Author

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  • Steve Laufer

    (NYU)

  • Ahu Gemici

    (NYU)

Abstract

Despite the large occurrence of cohabitation and its strong link to important behavioral outcomes, it has received little attention in the literature. We use data from the 1979 cohort of the National Longitudinal Survey (NLSY79) to document the labor supply, housework hours, and fertility patterns of cohabiting partners. The data suggests that in comparison to marriage, cohabitation is associated with a lower degree of household specialization, higher relationship instability, and greater degree of positive assortative mating. We develop and estimate a dynamic model of household formation and dissolution, fertility and labor supply and use the estimated model to perform policy experiments that investigate the welfare implications of different institutional arrangements regarding divorce regulations. In a dynamic model of the household with limited commitment, marriage leads to equilibrium outcomes that are closer to the efficient allocation when there are gains from specialization. On the other hand, cohabitation enables partners to insure themselves against uncertainty regarding the match quality of the relationship. Each match has different gains from either living arrangement, depending on their observable characteristics, and match quality. Cohabitation provides a tradeoff between the advantages and disadvantages of getting married and remaining single. Our goal is to use the estimated model to assess the welfare implications of inefficiencies that may arise in co-residential relationships due to lack of commitment.

Suggested Citation

  • Steve Laufer & Ahu Gemici, 2011. "Marriage and Cohabitation," 2011 Meeting Papers 1152, Society for Economic Dynamics.
    • Handle: RePEc:red:sed011:1152
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    References listed on IDEAS

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