Marriage with Labour Supply
34 Pages Posted: 21 Oct 2011
Date Written: September 1, 2011
We propose a search-matching model of the marriage market that extends Shimer and Smith (2000) to allow for labor supply. We characterize the steady-state equilibrium when exogenous divorce is the only source of risk. The estimated matching probabilities that can be derived from the steady-state flow conditions are strongly increasing in both male and female wages. We estimate that the share of marriage surplus appropriated by the man increases with his wage and that the share appropriated by the woman decreases with her wage. We find that leisure is an inferior good for men and a normal good for women.
Keywords: marriage search model, collective labor supply, structural estimation
JEL Classification: C78, D83, J12, J22
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