Qs of Interest:

1. What is the difference between personal mental accounting and family mental accounting?
2. How does marriage change people’s consumption? On what category do each partner changes spending proportion?
3. Reasons for divorce and empirical evidence?
4. Reasons for demand for sons? Veryfing hypotheses of Dahl & Moretti (RES, 2008)?
5. Might the biased sex ratios in favor of males in China be affecting the marriage market and creating brideprice pressures (Anderson, 2007)?
6. Does economic development render women less productive and decrease the demand for wives? (Anderson, 2007)

Asset in Marriage

Lafortune et al. (AEJAE, 2023) Collateralized Marriage

This paper explains why decline in marriage rate is not universal (highly stratified by homeownership, precisistently high for homeowners/asset holders) by introducing access to a joint savings technology as a collateral of marriage. Although unilateral divorce erodes the commitment of marriage by making divorce easier, and widespread acceptance of nonmarital fertility secures it, joint asset substitutes for the lost contracting security of marriage.

The authors establishe a model in which marriage is with cost $F$ from a random distribution, and value of the house (as a public good) that will be separated 50-50 if a divorce happens. The conclusion is that joint investment protects the lower-earning partner, and hence encourages specialization, investment in public goods and marital stability. Also, the value of marriage increases in wealth with increasing gradient. More generally, the model applies to the problem of public good investment with limited commitment.

Empirically, families who could not buy the house due to high house price specializes less (men work less, women’s time reallocated from home production to work with no change in leisure, women’s wage being higher). It also implies inequality and poverty, since limited access to wealth results in lower ability to secure investment, which is inhereited by the next generation.

Distribution in Marriage

Browning & Chiappori (1998, ECMA) Efficient Intra-Household Allocations: A General Characterization and Empirical Tests

This paper is the foundation of a thread of literature that rejects unitary model (claims that household decisions could be analysed as stemming from a unique, well-behaved utility function). It finds that Slutsky symmetry (the fundamental condition for utility maximization) is rejected for a Canadian sample of couples (but holds for samples of singles). However, this does not mean that family may not be maximizing utility, but suggests that the rejection is due to having the wrong model for couples (irrelevant with choice of functional form, goods, or heterogeneity).

The most important extension is to allow for distribution factors (environmental variables that may influence the decision process), formally defined as variables which do not enter individual utilities directly but that do affect distribution within the household. The collective model implies that there is a close relationship between the influence of such variables on demand and price responses.

Lundber et al (1997, JHR) Do Husbands and Wives Pool Their Resources? Evidence from the United Kingdom Child Benefit

This paper considers the effect of a change in the payment of child benefits in the U.K. in the 1980’s. This change effectively shifted the payment from fathers to mothers without a major impact on household income. In a unitary model, such a shift in “who gets what” should not lead to changes in household decisions (“income pooling”). However, this paper shows that, contrary to the unitary model theory, the policy changes caused significant increases in the demands for children and women’s clothing as compared to men’s clothing.

Bourguignon et al (2009, RES) Efficient Intra-Household Allocations and Distribution Factors: Implications and Identification

This paper investigates the properties of the “collective” approach to household behaviour, with the only one general assumption: that decisions taken within a household are “cooperative” or “collectively rational”, that is, lead to Pareto-efficient outcomes. However, the characteristic of collective result does not guarantee any certainty on intra-household distribution, which is influenced by “distributions factors” behind the allocation process within the household. The paper raises three potantial explainations: incomplete contracts and unforeseen contingencies, imperfect commitment (variant to divorce policy) and state of the market for marriage.

Bobonis (JPE, 2009) Is the Allocation of Resources within the Household Efficient? New Evidence from a Randomized Experiment

This paper investigates whether whether households make Pareto-efficient intrahousehold resource allocation decisions. By comparing early-entry and late-entry household in Mexico’s PROGRESA program, which is a conditional cash transfer program to women in low-income households, and income variation attributable to localized rainfall shocks, the author uses the variables as two distribution factors in a system of household consumption goods demand functions to test these restrictions of the collective model, and the result supports that ratio of distribution factor effects is equal across all public, collective, and individual private goods, which is the evidence of Pareto Efficiency.

Moreover, increases in income specific to female partners have substantial positive effects on expenditure shares in children’s clothing as well as adult female clothing expenditures, while income changes due to rainfall shocks influence expenditures on household public goods to a much lesser extent. It implies that women’s marginal willingness to pay for children’s goods being more sensitive to changes in their decision-making power than that of other decision makers within the household.

Child Marriage

Wahhaj (JEBO, 2018) An Economic Model of Early Marriage

This paper develops a signaling model to explain why early marriage might happen even when there is no inherent preference for young brides. It assumes that early marriage is desirable because being unmarried at a later age is a signal of being an undesirable type, and preferred types have a signaling incentive to enter the market early. In equilibrium, the quality of the bride pool is worse at later ages because bride type is sometimes revealed before marriage, leading some nonpreferred types to reenter the market when older. It shows that signaling can therefore lead to an equilibrium in which everyone marries earlier than is optimal, even though everyone (including men) would be weakly better-off if all women delayed.

Buchmann et al. (AER, 2023) A Signal to End Child Marriage: Theory and Experimental Evidence from Bangladesh

This paper provides empirical evidence by introduced a conditional incentive program that offered regular transfers to families in Bangladesh of adolescent girls between the ages of 15 and 17 as long as they remained unmarried, for up to 2 years or until they reached the age of consent (18).

Girls eligible for two years of incentive are 19 percent less likely to marry underage, comparing the to the traditional empowerment program that fails to decrease child marriage. Importantly, the delay in marriage resulting from the incentive did not lead to an increase in dowry or a decrease in spouse quality, which is regarded as a indicator of no marriage market penalty for delaying by the authors.

Similar to Wahhaj (2018), the model assumes age acts as a negative signal of bride quality, but for a very different reason: because preferred types (conservative) have lower returns to education and hence gain less from delaying marriage. This rationale also provides explanation of why schooling opportunities and adolescent empowerment programs are less effective, but conditional financial incentive succeeds in delay marriage by disrupting the signal that drives all types toward younger marriage.

Divorce

Padilla‐Romo et al. (JPubE, 2022) Parents’ Effective Time Endowment and Divorce: Evidence from Extended School Days.

This research provides the first causal evidence on the impact of implicit childcare subsidies (longer school days) on marriage dissolution. It examines the effect of access to full-time public schools on divorce rates in Mexico. Using a staggered DID approach, the study analyzes the effect of the expansion of full-time schooling (FTS) programs across various municipalities. The findings show that the introduction of FTS in a municipality led to an increase in the divorce rate by 0.021 divorces per 1,000 people two years after the program’s implementation. This effect grew over time, reaching 0.105 divorces per 1,000 people seven years after the program’s introduction.

Stevenson & Wolfers (JEP, 2008) Marriage and Divorce: Changes and Their Driving Forces

This paper summarized the trends of marriage and divorce of the past 100 years, with analysis about the reasons. It claims that these changes have come about as what is produced in the home has been dramatically altered both by the emergence of labor-saving technology in the home and by the development of service industries that allow much of what was once provided by specialized homemakers to be purchased in the market. Birth control and abortion has affected the potential consequences of sex both in and out of marriage, while changes in divorce laws have altered the terms of the marital bargain. It emphasized that, to remain relevant to the twenty-first century, the economics of the family will need to extend models of the family beyond the notion of a household-based firm and toward emphasizing motivations such as consumption complementarities and insurance as central to marriage.

Stevenson & Wolfers (QJE, 2006) Bargaining in the Shadow of the Law: Divorce Laws and Family Distress

This paper investigates the impact of unilateral divorce law, focusing on “who benefited from this change and by how much”. Event Study is applied to investigate the influence of law adoption on suicide rate, summing up relative time dummies after controlling for state and year fixed effects. DID is applied to study the influence of law on domestic violence. The paper regresses Treatment (if adopted unilateral divorce prior to 1985)*Post on DM, controlling for state, year and individual fixed effects. It finds that total female suicide declined by around 20 percent in the long run (over the 20 years following divorce law reform) in states that adopted unilateral divorce, and DV rates also decreased.

Children

Dahl & Moretti (RES, 2008) The Demand for Sons

This paper finds that child’s gender matters for shotgun marriages. Fathers who find out during pregnancy that their child will be a boy are more likely to marry their partner before delivery than those who find out that their child will be a girl. Also, the number of children is significantly higher in families with a first-born girl. One potential hypothesis is that parents (perhaps fathers in particular) have a preference for living with and spending time with sons over daughters. Another is that unbiased fathers decide to marry their partner if she has boys, not because they prefer boys over girls but because they believe that an absentee father hurts sons more than daughters (role model hypothesis). The third is that fathers have other comparative advantages in raising sons versus daughters (technology hypothesis), or girls cost more to raise in time and money, so that the surplus associated with a potential marriage is larger with sons.

Brideprice

Anderson (JEP, 2007) The Economics of Dowry and Brideprice

This paper provides a comprehensive review of the dowry and brideprice action across the world and in different historical periods. The general pattern seems to be that brideprice exists more frequently in primitive, tribal, and often nomadic societies, typically associated with reduced social stratification, but societies which do practice the custom are typically developed enough to own some form of property to transfer at the time of marriage. Brideprice-paying societies have also been associated with a strong female role in agriculture. It is also relatively constant across families of different income levels, do not vary with the rank of the wife in polygynous marriages. However, relative to brideprices, the amount of dowry varies substantially and tends to be negotiated on an individual basis.

Fertility

Barro & Becker (ECMA, 1989) Fertility Choice in a Model of Economic Growth

This paper treats fertility as an endogeneous choice of parents, and studies the determination of population growth through endogeneous fertility decisions. It finds that cost of raising children determines the overall level of descendants (level of population). Fertility rates determines the relative number of descendants in different generations (rate of population growth). The paper also finds that fertility and interest rates are positively correlated. Increase in cost also raises steady-state per capita capital stocks.