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Public Goods, Transferable Utility and Divorce Laws

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Author Info
Pierre-André Chiappori () (Columbia University)
Murat Iyigun () (University of Colorado and IZA)
Yoram Weiss () (Tel Aviv University and IZA)

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Abstract

We reconsider the well known Becker-Coase (BC) argument, according to which changes in divorce laws should not affect divorce rates, in the context of households which consume public goods in addition to private goods. For this result to hold, utility must be transferable both within marriage and upon divorce, and the marginal rate of substitution between public and private consumption needs to be invariant in marital status. We develop a model in which couples consume public goods and show that if divorce alters the way some goods are consumed (either because some goods that are public in marriage become private in divorce or because divorce affects the marginal rate of substitution between public and private goods), then the Becker-Coase theorem holds only under strict quasi-linearity. We conclude that, in general, divorce laws will influence the divorce rate, although the impact of a change in divorce laws can go in either direction.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2646.

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Length: 41 pages
Date of creation: Feb 2007
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Handle: RePEc:iza:izadps:dp2646

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Related research
Keywords: Becker-Coase theorem; collective model; divorce rates;

Find related papers by JEL classification:
C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-67, June. [Downloadable!] (restricted)
    Other versions:
  2. Leora Friedberg, 1998. "Did Unilateral Divorce Raise Divorce Rates? Evidence from Panel Data," NBER Working Papers 6398, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Peter A. Diamond & Eric Maskin, 1979. "An Equilibrium Analysis of Search and Breach of Contract, I: Steady States," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 282-316, Spring. [Downloadable!] (restricted)
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    Other versions:
  5. Gary S. Becker, . "Fertility and the Economy," University of Chicago - Population Research Center 92-3, Chicago - Population Research Center.
    Other versions:
  6. Bergstrom, Theodore C, 1999. " Systems of Benevolent Utility Functions," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 1(1), pages 71-100. [Downloadable!] (restricted)
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  7. Justin Wolfers, 2003. "Did Unilateral Divorce Laws Raise Divorce Rates? A Reconciliation and New Results," NBER Working Papers 10014, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  8. Niko Matouschek & Imran Rasul, 2008. "The Economics of the Marriage Contract: Theories and Evidence," Journal of Law & Economics, University of Chicago Press, vol. 51(1), pages 59-110, 02. [Downloadable!] (restricted)
  9. Pierre-André Chiappori & Yoram Weiss, 2007. "Divorce, Remarriage, and Child Support," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 37-74. [Downloadable!]
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  12. Ted Bergstrom & Richard Cornes, 1983. "Independence of Allocative Efficiency from Distribution in the Theory of Public Goods," University of California at Santa Barbara, Economics Working Paper Series 1983B, Department of Economics, UC Santa Barbara. [Downloadable!]
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  13. Lundberg, S.J. & Pollak, R.A. & Wales, T.J., 1994. "Do Husbands and Wives Pool Their Resources? Evidence from U.K. Child Benefit," Working Papers 94-6, University of Washington, Department of Economics.
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  14. Bourguignon, F. & Browning, M. & Chiappori, P.A. & Lechene, V., 1992. "Intra Household Allocation of Consumption : A Model and Some Evidence from French Data," DELTA Working Papers 92-08, DELTA (Ecole normale supérieure).
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  15. M. Browning & P. A. Chiappori, 1998. "Efficient Intra-Household Allocations: A General Characterization and Empirical Tests," Econometrica, Econometric Society, vol. 66(6), pages 1241-1278, November.
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  16. Clark, Simon, 1999. "Law, Property, and Marital Dissolution," Economic Journal, Royal Economic Society, vol. 109(454), pages C41-54, March. [Downloadable!] (restricted)
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  17. Giulio Fella & Paola Manzini & Marco Mariotti, 2004. "Does Divorce Law Matter?," Journal of the European Economic Association, MIT Press, vol. 2(4), pages 607-633, 06. [Downloadable!] (restricted)
    Other versions:
  18. Thomas, D., 1989. "Intra-Household Resource Allocation: An Inferential Approach," Papers 586, Yale - Economic Growth Center.
  19. Chiappori, P.A. & Ekeland, I., 2006. "The micro economics of group behavior: General characterization," Journal of Economic Theory, Elsevier, vol. 130(1), pages 1-26, September. [Downloadable!] (restricted)
  20. Chiappori, Pierre-Andre, 1988. "Rational Household Labor Supply," Econometrica, Econometric Society, vol. 56(1), pages 63-90, January. [Downloadable!] (restricted)
  21. Browning, M. & Bourguignon, F. & Chiappori, P.A. & Lechene, V., 1992. "Incomes and Outcomes: A structural Model of Intra-Household Allocation," DELTA Working Papers 92-23, DELTA (Ecole normale supérieure).
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  22. Imran Rasul, 2006. "Marriage Markets and Divorce Laws," Journal of Law, Economics and Organization, Oxford University Press, vol. 22(1), pages 30-69, April. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Marco Francesconi & Helmut Rainer & Wilbert van der Klaauw, 2009. "Unintended Consequences of Welfare Reform: The Case of Divorced Parents," CRIEFF Discussion Papers 0901, Centre for Research into Industry, Enterprise, Finance and the Firm. [Downloadable!]
    Other versions:
  2. Chiappori, Pierre-André & Iyigun, Murat & Weiss, Yoram, 2008. "An Assignment Model with Divorce and Remarriage," IZA Discussion Papers 3892, Institute for the Study of Labor (IZA). [Downloadable!]
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