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Risk Sharing and On-the-Marriage Search

Author

Listed:
  • Laura Turner

    (University of Toronto)

  • Kevin Devereux

    (University of Toronto)

Abstract

Much attention has been paid to the high divorce rate, but less recognized is the frequency of remarriage. To the extent that marriage provides consumption insurance, this prompts re-examination of the gains to marriage in terms of risk sharing. This paper shows that existing models of marriage with risk sharing and limited commitment cannot explain the rate and speed at which divorcees remarry. Introducing on-the-marriage search allows simulations to match the rates seen in the data.

Suggested Citation

  • Laura Turner & Kevin Devereux, 2014. "Risk Sharing and On-the-Marriage Search," 2014 Meeting Papers 815, Society for Economic Dynamics.
    • Handle: RePEc:red:sed014:815
    as

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    References listed on IDEAS

    as
    1. Jesus Fernández-Villaverde & Dirk Krueger, 2007. "Consumption over the Life Cycle: Facts from Consumer Expenditure Survey Data," The Review of Economics and Statistics, MIT Press, vol. 89(3), pages 552-565, August.
    2. Lones Smith, 2006. "The Marriage Model with Search Frictions," Journal of Political Economy, University of Chicago Press, vol. 114(6), pages 1124-1146, December.
    3. Burdett, Kenneth & Coles, Melvyn G, 1999. "Long-Term Partnership Formation: Marriage and Employment," Economic Journal, Royal Economic Society, vol. 109(456), pages 307-334, June.
    4. Giovanni Gallipoli & Laura Turner, 2009. "Household Responses to Individual Shocks: Disability and Labor Supply," Working Paper series 04_09, Rimini Centre for Economic Analysis.
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