United but (un)equal: human capital, probability of divorce, and the marriage contract
1
TSE-R -
Toulouse School of Economics
2 GREMAQ - Groupe de recherche en économie mathématique et quantitative
3 CEPR - Center for Economic Policy Research
4 CORE - Center of Operation Research and Econometrics [Louvain]
5 PSE - Paris-Jourdan Sciences Economiques
6 PSE - Paris School of Economics
7 LMU - Ludwig Maximilian University [Munich] = Ludwig Maximilians Universität München
2 GREMAQ - Groupe de recherche en économie mathématique et quantitative
3 CEPR - Center for Economic Policy Research
4 CORE - Center of Operation Research and Econometrics [Louvain]
5 PSE - Paris-Jourdan Sciences Economiques
6 PSE - Paris School of Economics
7 LMU - Ludwig Maximilian University [Munich] = Ludwig Maximilians Universität München
Helmuth Cremer
- Fonction : Auteur
- PersonId : 833684
Résumé
This paper studies how the risk of divorce affects the human capital decisions of a young couple. We consider a setting where complete specialization is optimal with no divorce risk. Couples can self-insure through savings which offers some protection to the uneducated spouse, but at the expense of a distortion. Alternatively, for large divorce probabilities, symmetry in education, where both spouses receive an equal amount of education, may be optimal. This eliminates the risk associated with the lack of education, but reduces the efficiency of education choices. We show that the symmetric allocation will become more attractive as the probability of divorce increases, if risk aversion is high and/or labor supply elasticity is low. However, it is only a “second-best” solution as insurance protection is achieved at the expense of an efficiency loss. Finally, we study how the (economic) use of marriage is affected by the possibility of divorce.
Domaines
Economies et financesFormat du dépôt | Notice |
---|---|
Type de dépôt | Article dans une revue |
Titre |
en
United but (un)equal: human capital, probability of divorce, and the marriage contract
|
Résumé |
en
This paper studies how the risk of divorce affects the human capital decisions of a young couple. We consider a setting where complete specialization is optimal with no divorce risk. Couples can self-insure through savings which offers some protection to the uneducated spouse, but at the expense of a distortion. Alternatively, for large divorce probabilities, symmetry in education, where both spouses receive an equal amount of education, may be optimal. This eliminates the risk associated with the lack of education, but reduces the efficiency of education choices. We show that the symmetric allocation will become more attractive as the probability of divorce increases, if risk aversion is high and/or labor supply elasticity is low. However, it is only a “second-best” solution as insurance protection is achieved at the expense of an efficiency loss. Finally, we study how the (economic) use of marriage is affected by the possibility of divorce.
|
Auteur(s) |
Helmuth Cremer
1, 2
, Pierre Pestieau
3, 4, 5, 6
, Kerstin Roeder
7
1
TSE-R -
Toulouse School of Economics
( 93477 )
- Manufacture de Tabacs, 21 allées de Brienne 31000 Toulouse
- France
2
GREMAQ -
Groupe de recherche en économie mathématique et quantitative
( 744 )
- manufacture des tabacs - bat. F 21 Allée de Brienne 31000 TOULOUSE
- France
3
CEPR -
Center for Economic Policy Research
( 143559 )
- Royaume-Uni
4
CORE -
Center of Operation Research and Econometrics [Louvain]
( 48233 )
- 34, Voie du Roman Pays B-1348 Louvain-la-Neuve
- Belgique
5
PSE -
Paris-Jourdan Sciences Economiques
( 139754 )
- 48 boulevard Jourdan 75014 Paris
- France
6
PSE -
Paris School of Economics
( 301309 )
- 48 boulevard Jourdan 75014 Paris
- France
7
LMU -
Ludwig Maximilian University [Munich] = Ludwig Maximilians Universität München
( 460393 )
- Professor-Huber-Platz 2, 80539 München, Allemagne
- Allemagne
|
Langue du document |
Anglais
|
Nom de la revue |
|
Vulgarisation |
Non
|
Comité de lecture |
Oui
|
Audience |
Internationale
|
Date de publication |
2015-01
|
Volume |
28
|
Numéro |
1
|
Page/Identifiant |
195-217
|
Public visé |
Scientifique
|
Sous-type de document pour les Articles |
Research article
|
Domaine(s) |
|
Voir aussi |
|
Mots-clés (JEL) |
|
Mots-clés |
en
Human capital, Divorce, Marriage
|
DOI | 10.1007/s00148-014-0504-1 |
ProdINRA | 312595 |
UT key WOS | 000344345500009 |
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