Are Intra-Household Allocations Policy Neutral? Theory and Empirical Evidence

43 Pages Posted: 28 Mar 2011

See all articles by Pierre-Andre Chiappori

Pierre-Andre Chiappori

Columbia University - Graduate School of Arts and Sciences, Department of Economics

Murat Iyigun

University of Colorado at Boulder - Department of Economics; Harvard University - Center for International Development (CID); IZA Institute of Labor Economics

Jeanne Lafortune

University of Maryland - College Park

Yoram Weiss

Tel Aviv University - Eitan Berglas School of Economics; National Bureau of Economic Research (NBER); IZA Institute of Labor Economics

Abstract

We develop a collective household model with spousal matching in which there exists marital gains to assortative matching and marriage quality for each couple is revealed ex post. Changes in alimony laws are shown to affect existing couples and couples-to-be differently. For existing couples, legislative changes that favor (wo)men benefit them especially if the marriage match quality is low, while, for couples not yet formed, they generate offsetting intra-household transfers and lower intra-marital allocations for the spouses who are the intended beneficiary. We then estimate the effect of granting alimony rights to cohabiting couples in Canada using a triple-difference framework since each province extended these rights in different years and requiring different cohabitation length. We find that obtaining the right to petition for alimony led women to lower their labor force participation. These results, however, do not hold – and, in some cases, are reversed – for newly formed cohabiting couples.

Keywords: intra-household allocations, matching, cohabitation, alimony laws

JEL Classification: J12, J16, J24

Suggested Citation

Chiappori, Pierre-Andre and Iyigun, Murat F. and Lafortune, Jeanne and Weiss, Yoram, Are Intra-Household Allocations Policy Neutral? Theory and Empirical Evidence. IZA Discussion Paper No. 5594, Available at SSRN: https://ssrn.com/abstract=1796589 or http://dx.doi.org/10.2139/ssrn.1796589

Pierre-Andre Chiappori (Contact Author)

Columbia University - Graduate School of Arts and Sciences, Department of Economics ( email )

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Murat F. Iyigun

University of Colorado at Boulder - Department of Economics ( email )

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Harvard University - Center for International Development (CID) ( email )

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IZA Institute of Labor Economics

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Jeanne Lafortune

University of Maryland - College Park ( email )

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Yoram Weiss

Tel Aviv University - Eitan Berglas School of Economics ( email )

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+972 3 640 9908 (Fax)

National Bureau of Economic Research (NBER)

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IZA Institute of Labor Economics

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