Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/75959 
Year of Publication: 
2002
Series/Report no.: 
CESifo Working Paper No. 702
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
Why do some U.S. states have higher levels of marital formation than others? This paper introduces an economic model wherin a state's representative individual may choose to marry in order to diversify his or her idiosyncratic income risk. The paper demonstrates that such a diversification motive is enhanced for some utility functions when a state's level of undiversifiable risk becomes larger, and when a state's initial income and growth rate is lower. A test of the model's predictions, using cross-sectional data for the 50 U.S. states, suggests that there is broad support for a risk sharing motive for marriage as well as for a precautionary savings motive.
Subjects: 
consumption insurance
marriage
Document Type: 
Working Paper
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