Abstract

http://ssrn.com/abstract=1968855
 


 



Household Relational Contracts for Marriage, Fertility and Divorce


Matthias Fahn


University of Wuerzburg

Ray Rees


Ludwig-Maximilians-Universität München - Faculty of Economics; CESifo (Center for Economic Studies and Ifo Institute)

November 30, 2011

CESifo Working Paper Series No. 3655

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 among partners, there is a potential conflict between individually optimal and efficient, i.e. surplus maximizing, 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 relational contracts framework, we analyze the effects of policy variables such as rights of access to children post-separation and wealth division/alimony rules, as well as the legal costs of divorce, on the interrelationships among the decisions on marriage, fertility and divorce.

Number of Pages in PDF File: 39

JEL Classification: C730, D130, J120, J130, J240

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Date posted: December 6, 2011  

Suggested Citation

Fahn, Matthias and Rees, Ray, Household Relational Contracts for Marriage, Fertility and Divorce (November 30, 2011). CESifo Working Paper Series No. 3655. Available at SSRN: http://ssrn.com/abstract=1968855

Contact Information

Matthias Fahn
University of Wuerzburg ( email )
Sanderring 2
Wuerzburg, D-97070
Germany
Ray Rees (Contact Author)
Ludwig-Maximilians-Universität München - Faculty of Economics ( email )
Munich, D-80539
Germany
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
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