Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/53137
Authors: 
Fahn, Matthias
Rees, Ray
Year of Publication: 
2011
Series/Report no.: 
CESifo working paper: Public Finance 3655
Abstract: 
This paper applies the theory of relational contracts to a model in which a couple decides whether to marry or cohabit, how many children to have and subsequently whether to stay together or separate. We make precise the idea that cooperation in a household can be supported by self interest. Since the costs of raising children are unequally distributed among partners, there is a potential conflict between individually optimal and efficient, i.e. surplus maximizing, decisions. Side-payments are used to support cooperation but are not legally enforceable and thus have to be part of an equilibrium. This requires a stable relationship and credible punishment threats. Within this relational contracts framework, we analyze the effects of policy variables such as rights of access to children post-separation and wealth division/alimony rules, as well as the legal costs of divorce, on the interrelationships among the decisions on marriage, fertility and divorce.
JEL: 
C73
D13
J12
J13
J24
Document Type: 
Working Paper

Files in This Item:
File
Size
291.55 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.