In my dissertation I explore several applications of collective household models with limited commitment to study the behavior of singles and couples in the modern US marriage markets in presence of endogenous risk of divorce. In the first chapter, I show that the model is capable of rationalizing the patterns of childbearing inside and outside of marriage. Namely, I show that the presence of children distorts marriage choices significantly and often leads to the creation of risky marriages. This suggests a large variation in unobservable marriage quality and negative overall effects of potential marriage-promoting policies. In the second chapter, co-authored with Fabio Blasutto, we argue that the collective household model can be used to study the evolution of the choice between marriage and cohabitation. Exploiting the changes in the US divorce laws, we show that easier divorce makes more people prefer cohabitation to formal marriage. Couples with intermediate levels of match quality, who ex-ante have higher risks of divorce, would choose to avoid marriage altogether if the divorce procedure becomes easier. In the third chapter, I show that the mathematical properties of the model are often not desirable, as divorce decisions are binary and therefore can jump in response to small changes in the couple’s resources. These jumps make savings decisions discontinuous and complicate obtaining precise numerical solutions. I propose a way to mitigate these discontinuities by introducing an alternative setup, where the divorce decisions are probabilistic.

Creator

• Kozlov, Egor

DOI

• https://doi.org/10.21985/n2-z6b5-pw92

Subject

• Economics

Language

• en

Alternate Identifier

• etdadmin_upload_820517
• http://dissertations.umi.com/northwestern:15596

Keyword

• household behavior
• family economics
• marriage and divorce
• macroeconomics

Date created

• 2021-01-01

Resource type

• Dissertation

Rights statement

• In Copyright