Husbands too can be egalitarian if necessary: An Analysis of intra-marital sharing rules

Abstract:     
Much of economic theory still considers the household as a homogeneous and harmonious unit where the spouses have equal power. A well-known empirical fact is that women, in general, earn less than men. Several studies suggest that a woman's power within household is related to her income. However, there are many households in which spouses' personal spending levels are more or less egalitarian. Here, we provide a model to show, among other things, that an egalitarian personal spending pattern by the spouses under certain circumstances is consistent with the fact that women typically earn lower wages than men. We focus on two possible types of intra-marital division: egalitarian and proportional. We have a two-stage game. The first stage is the prenuptial stage. At that stage, first the male decides whether or not to propose marriage. If he does not, the parties receive their autarky payoffs forever; if he does, the female can either accept or reject the proposal. If she rejects it, the parties receive their autarky payoffs forever. If she accepts it, the postnuptial stage is reached. In the postnuptial subgame, first the husband decides whether to make an egalitarian offer or a proportional offer. Whichever offer he decides to make has to be accepted by the wife for all periods that follow; otherwise a divorce follows. We identify the circumstances under which in equilibrium (i) egalitarian division within the marriage takes place, (ii) proportional division arises, (iii) divorce takes place, (iv) the male chooses not to propose marriage.

JEL Classification: D39, J12, J16

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