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Public Goods, Transferable Utility and Divorce Laws

Author

Listed:
  • Chiappori, Pierre-André

    (Columbia University)

  • Iyigun, Murat

    (University of Colorado, Boulder)

  • Weiss, Yoram

    (Tel Aviv University)

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.

Suggested Citation

  • Chiappori, Pierre-André & Iyigun, Murat & Weiss, Yoram, 2007. "Public Goods, Transferable Utility and Divorce Laws," IZA Discussion Papers 2646, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp2646
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    References listed on IDEAS

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    Cited by:

    1. Alessandra Voena, 2015. "Yours, Mine, and Ours: Do Divorce Laws Affect the Intertemporal Behavior of Married Couples?," American Economic Review, American Economic Association, vol. 105(8), pages 2295-2332, August.
    2. Sun, Ang & Zhao, Yaohui, 2016. "Divorce, abortion, and the child sex ratio: The impact of divorce reform in China," Journal of Development Economics, Elsevier, vol. 120(C), pages 53-69.
    3. René Böheim & Mario Francesconi & Martin Halla, 2012. "Does custody law affect family behavior in and out of marriage?," Economics working papers 2012-12, Department of Economics, Johannes Kepler University Linz, Austria.
    4. Chiappori, Pierre-André & Iyigun, Murat & Weiss, Yoram, 2008. "An Assignment Model with Divorce and Remarriage," IZA Discussion Papers 3892, Institute of Labor Economics (IZA).
    5. Elisabeth Gugl & Linda Welling, 2017. "Efficiency of Family Bargaining Models with Renegotiation: The Role of Transferable Utility across Periods," Studies in Microeconomics, , vol. 5(1), pages 53-83, June.
    6. Sun, Ang & Zhao, Yaohui, 2014. "Divorce, Abortion and Children's Sex Ratio: The Impact of Divorce Reform in China," IZA Discussion Papers 8230, Institute of Labor Economics (IZA).
    7. Francesconi, Marco & Rainer, Helmut & van der Klaauw, Wilbert, 2008. "Unintended Consequences of Welfare Reform: The Case of Divorced Parents," IZA Discussion Papers 3891, Institute of Labor Economics (IZA).
    8. Kristin Mammen, 2008. "The Long-Term Effects of the Divorce Revolution: Health, Wealth, and Labor Supply," Working Papers, Center for Retirement Research at Boston College wp2008-22, Center for Retirement Research, revised Nov 2008.
    9. Pierre‐Andre Chiappori & Murat Iyigun & Jeanne Lafortune & Yoram Weiss, 2017. "Changing the Rules Midway: The Impact of Granting Alimony Rights on Existing and Newly Formed Partnerships," Economic Journal, Royal Economic Society, vol. 127(604), pages 1874-1905, September.
    10. Thorsten Kneip & Gerrit Bauer & Steffen Reinhold, 2014. "Direct and Indirect Effects of Unilateral Divorce Law on Marital Stability," Demography, Springer;Population Association of America (PAA), vol. 51(6), pages 2103-2126, December.
    11. repec:esx:essedp:724 is not listed on IDEAS
    12. Fisher, H., 2011. "Divorce Property Division and the Decision to Marry or Cohabit," Cambridge Working Papers in Economics 1101, Faculty of Economics, University of Cambridge.

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    More about this item

    Keywords

    Becker-Coase theorem; collective model; divorce rates;
    All these keywords.

    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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