A Collective Household Model with Choice-Dependent Sharing Rules

34 Pages Posted: 6 Oct 2004

See all articles by Murat Iyigun

Murat Iyigun

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

Date Written: August 2004

Abstract

This paper presents a collective household model in which there are marital gains to assortative spousal matching, individuals face a labor-leisure choice and intra-marital allocations are determined by an endogenous sharing rule that is driven by actual wage earnings. The latter two features of the model introduce the potential for inefficiently high levels of labor supply because spouses recognize that changes in their labor supply would influence not only total household income but also their respective shares in intra-household allocations. Nonetheless, when sex ratios are imbalanced or external distribution factors are not gender neutral, competition among potential spouses in the large marriage markets helps to generate maritally sustainable Pareto efficient levels of labor supply and intra-household allocations. In such cases, the sharing rule that supports the maritally sustainable and Pareto efficient equilibrium outcome is also unique for each couple along the assortative order.

Keywords: Marriage, matching, household labor supply

JEL Classification: C78, D61, D70

Suggested Citation

Iyigun, Murat F., A Collective Household Model with Choice-Dependent Sharing Rules (August 2004). Available at SSRN: https://ssrn.com/abstract=585421 or http://dx.doi.org/10.2139/ssrn.585421

Murat F. Iyigun (Contact Author)

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

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Boulder, CO 80309
United States
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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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