Essays on Marriage Market and Intra-Household Allocation

Abstract

The importance of the family as a social group cannot be overestimated.1 Becker was the first to point out that the tools of economic analysis (and in particular, price theory) could be applied to the analysis of such demographic phenomena as marriage.2 While implications of his model have been tested and applied, it has seldom been estimated and, to the author’s best knowledge, never been scrutinized using micro-level data.3 Further, cohabitation, with a growing trend as an alternative to declining marriage, has never been compared to marriage. This paper uses a static transferable utility model of the marriage market to estimate a non-parametric marriage matching function. The model was used to estimate U.S. marriage and cohabitation values between 2008 to 2020 using Integrated Public Use Microdata Series (IPUMS) USA data. The model shows the effect of different variables on the estimated mutual and individual gain from marriage and cohabitation, including income, education, race, and age. Incentives to specialize in the cohabitation market were found to be more prominent than in the marriage market. Unlike new marriages, cohabitation values couples’ age gap of over 30 years. Old marriages estimated gain decreases by educational differences, showing positive assortativeness, unlike new marriages and cohabitation. The estimation of the cohabitation matching function exhibits the least educational assortativeness. The trend of the matching function indicates no changes in the assortativeness of the match over the past 13 years.