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Chami, Ralph
Hess, Gregory D.
Year of Publication: 
Series/Report no.: 
CESifo Working Paper 702
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.
consumption insurance
Document Type: 
Working Paper

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