Citation

Cigno A. Rev. Econ. Househ. 2012; 10(2): 193-213.

Copyright

(Copyright © 2012, Holtzbrinck Springer Nature Publishing Group)

DOI

10.1007/s11150-012-9141-1

PMID

unavailable

Abstract

Non-cooperative couples are inefficient. Cooperation raises the utility of both parents, and of each child, but does not guarantee efficiency. In the presence of credit rationing, a cooperative equilibrium may not exist outside marriage, because the main earner cannot credibly promise to compensate the main childcarer at some future date, and may not be able or willing to do so at front. By allowing the main childcarer to credibly threaten divorce if the main earner does not deliver the promised compensation when the time comes, marriage makes that promise credible, and thus increases the probability that a cooperative equilibrium will exist. In a separate-property jurisdiction, a reduction in the cost or difficulty of obtaining a divorce increases married women's participation in the labour market. In a community-property one, it has no such effect.