Household Relational Contracts for Marriage, Fertility and Divorce

Fahn, Matthias und Rees, Ray (März 2014): Household Relational Contracts for Marriage, Fertility and Divorce. Münchener Wirtschaftswissenschaftliche Beiträge (VWL) 2014-13

Abstract

This paper applies the theory of relational contracts to a model in which a couple decides whether to marry or cohabit, how many children to have and subsequently whether to stay together or separate. We make precise the idea that cooperation in a household can be supported by self interest. Since the costs of raising children are unequally distributed between partners and children are a household public good, there is a conflict between individually optimal and efficient, i.e. surplus maximising, decisions. Side-payments are used to support cooperation but are not legally enforceable and thus have to be part of an equilibrium. This requires a stable relationship and credible punishment threats. Within this framework, we analyze the effects of policy variables such as the costs of divorce and post-divorce income payments on the interrelationships among the decisions on marriage, fertility and divorce.

• Dokumententyp: Paper
• Keywords: relational contracts, cohabitation, marriage, fertility, divorce
• Fakultät: Volkswirtschaft > Munich Discussion Papers in Economics
• Themengebiete: 300 Sozialwissenschaften > 330 Wirtschaft
• JEL Classification: C73, D13, J12, J13, J24
• Sprache: Englisch

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