Betting the House: How Assets Influence Marriage Selection, Marital Stability, and Child Investments

46 Pages Posted: 5 Dec 2017

See all articles by Jeanne Lafortune

Jeanne Lafortune

University of Maryland - College Park

Corinne Low

University of Pennsylvania

Abstract

Marriage used to be practically universal, but now persists as an institution for only some groups, while others choose non-marital fertility. This paper posits that if one role of marriage is to insure one partner's investment in children, then home-ownership can be seen as providing the necessary "collateral" for this contract. As easier divorce and paternity enforcement outside of marriage have reduced the relative strength of the marital contract, the division of assets, particularly the family home, post-separation has remained unique to marriage.We provide a model where husbands can "ante up" the marital home to elicit more optimal child investments, whose costs are born mostly by the mother, by reducing the chance of divorce while providing consumption insurance to their partner. This, in turn, increases the value of marriage for those able to access this collateralized version of the contract. The model predicts that individuals able to buy a home at the time of marriage will invest more in children and have greater labor specialization, while policy changes that eroded marriage's relative commitment value would have heterogenous effects by asset-holding, both of which appear to hold in US data.

Keywords: marriage, commitment, child investment, housing

JEL Classification: D13, J12

Suggested Citation

Lafortune, Jeanne and Low, Corinne, Betting the House: How Assets Influence Marriage Selection, Marital Stability, and Child Investments. IZA Discussion Paper No. 11176, Available at SSRN: https://ssrn.com/abstract=3081410

Jeanne Lafortune (Contact Author)

University of Maryland - College Park ( email )

College Park, MD 20742
United States

Corinne Low

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

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