building the family nest premarital investments marriage markets and spousal allocations we develop a model of the household in which spousal incomes are determined by premarital investments the marriage market is characterized by assortative matching and endogenously determined sharing rules form the basis of intra household allocations by incorporating pre marital investments and spousal matching into the collective household model we are able to identify the fundamental determinants of endogenously determined and maritally sustainable intra marital sharing rules in particular we find that all sharing rules along the assortative order support unconditionally efficient outcomes where both pre marital investments and intra household allocations are efficient the efficiency of both pre marital choices and household allocations then enables us to show that for each couple the marriage market generates a unique and maritally sustainable sharing rule that is a function of the distribution of pre marital endowments and the sex ratios in the market

selection investment and women s relative wages over time in theory growing wage inequality within gender should cause women to invest more in their market productivity and should differentially pull able women into the workforce our paper uses heckman s two step estimator and identification at infinity on repeated current population survey cross sections to calculate relative wage series for women since 1970 that hold constant the composition of skills we find that selection into the female full time full year workforce shifted from negative in the 1970s to positive in the 1990s and that the majority of the apparent narrowing of the gender wage gap reflects changes in female workforce composition we find the same types of composition changes by measuring husbands wages and national longitudinal survey iq data as proxies for unobserved skills our findings help to explain why growing wage equality between genders coincided with growing inequality within gender

the incidence of personal income taxation evidence from the tax reform act of 1986 abstract this paper studies the short run incidence of personal income taxation in the us by examining how the wage structure shifted after the tax reform act of 1986 i calculate the marginal tax rate for the median worker of each occupation during the 1980s to determine the professions whose workers were most affected by the tax change when controlling for trends over time in the wage structure by occupation i find that individuals in occupations that experienced large decreases in their median marginal tax rates received lower pre tax wages after 1986 as the number of workers and the hours worked in those professions increased the results suggest that consideration of the wage effects of tax reforms is important when using these reforms to identify behavioral parameters and evaluating their distributional consequences

does marriage really make men more productive this paper presents new descriptive evidence regarding marital pay premiums earned by white males longitudinal data indicate that wages rise after marriage and that cross sectional marriage premiums appear to result from a steepening of the earnings profile data from a company personnelfile that includes information on job grades and supervisor performance ratings reveal large marital status pay differences within a narrow range of occupations managers and professionals and environments a single firm married workers tend to be located in higher paying job grades there are very small pay differentials within grades married men receive higher performance ratings than single men as a result they are much more likely to be promoted controlling for rated performance however eliminates the promotion differential sanders korenman is an assistant professor of economics and public affairs at princeton university and is a faculty associate of the office of population research at princeton university and a research affiliate of the national bureau of economic research nber david neumark is an assistant professor of economics at the university of pennsylvania and a research affiliate of the nber korenman wishes to acknowledge the hewlett foundation and the harvard university center for population studies for financial support the authors are grateful to james medofffor making available an extract from the company personnelfile questions regarding data availability should be directed to professor james

skill biased technological change and rising wage inequality some problems and puzzles the recent rise in wage inequality is usually attributed to skill biased technical change sbtc associated with new computer technologies we review the evidence for this hypothesis focusing on the implications of sbtc for overall wage inequality and for changes in wage differentials between groups a key problem for the sbtc hypothesis is that wage inequality stabilized in the 1990s despite continuing advances in computer technology sbtc also fails to explain the evolution of other dimensions of wage inequality including the gender and racial wage gaps and the age gradient in the return to education

methodology doesn t matter but the history of thought might methodological discourse is concerned to develop and utilize methods of evaluation of work in economics methodology as a program is concerned to affect practice by criticizing practice from a position apart from practice this paper reminds economists that no such position apart from practice is ever available and so methodology as opposed to methodological discourse cannot succeed and what cannot succeed cannot have consequences anti methodology or pragmatism or in economics what is now termed rhetoric cannot have consequences either for the same reasons the paper goes on to argue that what might have consequences for practice is the history of economic thought broadly understood as a critical self consciousness

does increasing women s schooling raise the schooling of the next generation the positive cross sectional relationship between the schooling of mothers and their children is substantially biased upward due to correlations between schooling and heritable ability as well as assortative mating an increase in the schooling of women would not have beneficial effects in terms of the schooling of children increased maternal schooling leads to reduced home time for mothers anticipating the consequences of investing in women s schooling requires attention to the role that schooling plays in the marriage market as well as to opportunities in the labor market for women

progress in behavioral game theory i s game theory meant to describe actual choices by people and institutions or not it is remarkable how much game theory has been done while largely ignoring this question the seminal book by von neumann and morgenstern the theory of games and economic behavior was clearly about how rational players would play against others they knew were rational in more recent work game theorists are not always explicit about what they aim to describe or advise at one extreme highly mathematical analyses have proposed rationality requirements that people and firms are probably not smart enough to satisfy in everyday decisions at the other extreme adaptive and evolutionary approaches use very simple modelsmostly developed to describe nonhuman animals in which players may not realize they are playing a game at all when game theory does aim to describe behavior it often proceeds with a disturbingly low ratio of careful observation to theorizing this paper describes an approach called behavioral game theory which aims to describe actual behavior is driven by empirical observation mostly experiments and charts a middle course between over rational equilibrium analyses and under rational adaptive analyses the recipe for behavioral game theory i will describe has three steps start with a game or naturally occurring situation in which standard game theory makes a bold prediction based on one or two crucial principles if behavior differs from interested readers familiar with game theory should read crawford 1997 whose approach is more eclectic than mine he concludes p 236 that most strategic behavior can be understood via a synthesis that combines elements from each of the leading theoretical frameworks traditional game theory evolutionary game theory and adaptive learning with a modicum of empirical information about behavior behavioral game theory adds psychological interpretations to this synthesis

schooling search and spouse selection testing economic theories of marriage and household behavior the implications of the economic theories of marriage and of household fertility behavior are tested in a framework in which educational investment marital search and marital matches are responsive to marriage market conditions and the personal traits of individual agents some of which are unobserved by the econometrician implications are also derived and tested for the effects of longevity attractiveness preferences and labor and marriage market conditions on schooling marriage age and spouse choice the empirical results indicate that inattention to heterogeneity and martial selection leads to a false rejection of the economic theory of marriage but to a false acceptance of the value of time fertility hypothesis

going the same weigh spousal correlations in obesity in the united kingdom the obesity epidemic has received widespread media and research attention however the social phenomenon of obesity is still not well understood data from the british household panel survey bhps show positive and significant correlations in spousal body mass index bmi this article explores the three mechanisms of matching in the marriage market social learning and shared environment to explain this correlation we apply a novel method of testing for social learning by focusing on how the addition of individual and partner health and marriage length affects the correlation in spousal bmi results show the importance of matching in the marriage market in explaining correlated bmi outcomes there is significant correlation in partner bmi even after controlling for own health spouse health marriage length and regional effects suggesting evidence of a social influence however it does not appear to be a learning effect as the spouse health and marriage length are insignificant

engines of liberation electricity was born at the dawn of the last century households were inundated with a flood of new consumer durables what was the impact of this consumer durable goods revolution it is argued here that the consumer goods revolution was conducive to liberating women from the home to analyse this hypothesis a beckerian model of household production is developed households must decide whether or not to adopt the new technologies and whether a married woman should work can such a model help to explain the rise in married female labour force participation that occurred in the last century yes the housewife of the future will be neither a slave to servants nor herself a drudge she will give less attention to the home because the home will need less she will be rather a domestic engineer than a domestic labourer with the greatest of all handmaidens electricity at her service this and other mechanical forces will so revolutionize the woman s world that a large portion of the aggregate of woman s energy will be conserved for use in broader more constructive fields thomas alva edison as interviewed in good housekeeping magazine lv no 4 october 1912 p 436

more on marriage fertility and the distribution of income according to pareto 1896 the distribution of income depends on the nature of the people comprising a society on the organization of the latter and also in part on chance in the model developed here the nature of the people is captured by attitudes toward marriage divorce fertility and children singles search for mates in a marriage market married agents bargain about work and the quantity and quality of children they can divorce social policies such as child support requirements reflect the organization of the society finally chance is modeled by randomness in income marriage opportunities and marital bliss

marriage and divorce changes and their driving forces the family is not a static institution in recent decades marriage rates have fallen divorce rates have risen and the defining characteristics of marriage have changed the economic approach to the family seeks to explain these trends by reference to models that can also explain how and why families form gary becker s 1981 treatise on the family proposed a theory based on production complementarities in which husband and wife specialize in the market and domestic spheres respectively production complementarities also arise in the production and rearing of one s own children however production complementarities at least as initially described are decreasingly central to modern family life increased longevity and declining fertility mean that most of one s adult life is spent without one s own children in the household also the rise in marital formation at older ages including remarriage means that many families form with no intention of producing children moreover increases in female labor force participation suggest that household specialization has either declined or at least taken on a different meaning these changes have come about as what is produced in the home has been dramatically altered both by the emergence of labor saving technology in the home and by the development of service industries that allow much of what was once provided by specialized homemakers to be purchased in the market the availabil

life cycle schooling and dynamic selection bias models and evidence for five cohorts of american males this paper examines an empirical regularity found in many societies that family influences on the probability of transiting from one grade level to the next diminish at higher levels of education we examine the statistical model used to establish the empirical regularity and the intuitive behavioral interpretation often used to rationalize it we show that the implicit economic model assumes myopia the intuitive interpretive model is identified only by imposing arbitrary distributional assumptions onto the data we produce an alternative choice theoretic model with fewer parameters that rationalizes the same data and is not based on arbitrary distributional assumptions

an analysis of out of wedlock childbearing in the united states this paper relates the erosion of the custom of shotgun marriage to the legalization of abortion and the increased availability of contraception to unmarried women in the united states the decline in shotgun marriage accounts for a significant fraction of the increase in out of wedlock first births several models illustrate the analogy between women who do not adopt either birth control or abortion and the hand loom weavers both victims of changing technology mechanisms causing female immiseration are modeled and historically described this technology shock hypothesis is an alternative to welfare and job shortage theories of the feminization of poverty excerpt

estimating bounded rationality and pricing performance uncertainty abstract this paper estimates bounded rationality in two outcome strictly competitive extensive form games of perfect information without chance moves in the baseline sessions the average subject can reason effectively to about rank 6 twelve percent of these subjects have a perfect bound on their ability to achieve the substantively rational outcome they win all simpler games and they lose all games more complicated than the estimated rationality bound most subjects do not have accurate expectations about their performance against a procedurally rational opponent usually they value the games at more than they are likely to earn if they actually play them

consumption over the life cycle facts from consumer expenditure survey data this paper uses consumer expenditure survey data and a seminonparametric statistical model to estimate life cycle profiles of consumption controlling for demographics cohort and time effects we construct age profiles for total and nondurable consumption as well as expenditure patterns for consumer durables special emphasis is placed on the comparison of different approaches to control for changes in demo graphics over the life cycle we find significant humps over the life cycle for total nondurable and durable expenditures changes in household size account for roughly half of these humps bootstrap simulations suggest that our empirical estimates are tight in that standard errors are small

waiting for mr right rising inequality and declining marriage rates abstract this paper demonstrates that women search longer for their first or second husband in cities with higher male wage inequality and examines several alternative explanations a causal link is established by controlling for city fixed effects and city specific time trends and by using inequality in the woman s state of birth as a proxy for local male inequality increasing inequality explains about 25 of the marriage rate decline over the last few decades and this is not due to the endogenous moving or labor force decisions of women nor to the marital decisions of men in reaction to changes in their own wages

formalism logic and reality a keynesian analysis in the view of many perhaps most economists to state a theory in terms of a formal model is an unambiguous improvement rather than as we see it a matter of costs and benefits the benefits greater rigour more precision demonstrable results are widely understood while the costs are underexplored the costs are associated with the way in which formalising an argument can change its meaning i e with its non neutrality this paper will focus on the particular costs of formalism associated with the obstacles formal ism poses for translating from formalist theory to practical application

a boundedly rational decision algorithm cognition requires scarce inputs including time and concentration since cognition is costly sophisticated decision makers should use mental shortcuts or heuristics to reduce cognitive burdens a model is proposed and tested that is motivated by these principles it is believed this model achieves four goals first the model makes quantitative behavioral predictions and hence provides a precise alternative to the rational actor hypothesis second the model is psychologically plausible because it is based on the actual decisions algorithms that subjects claim to use third the model is empirically testable such a test is provided in this paper fourth the model is broadly applicable because it can be used to analyze decision problems that can be represented in tree form

accounting for the gender gap in college attainment i introduction one striking phenomenon in the u s labor market is the reversal of the gender gap in college attainment in 1980 57 of young men aged 25 34 compared with 46 of young women had some college education by age 34 by 1996 however female college attainment had reached 64 5 percentage points higher than that of the males in the same cohort in tact females overtook males in college attainment in 1987 and have led ever since a large body of empirical research emphasizes the role of the earnings premium as a key explanatory variable for the determination of education outcomes see e g becket 1967 mincer 1974 willis and rosen 1979 in addition an extensive literature shows that family background is an important determinant of the schooling decision see among others cameron and heckman 1998 2001 eckstein and wolpin 1999 ge 2008 kane 1994 recently several papers have argued empirically and theoretically that expected marriage is important in determining the schooling decision e g chiappori iyigun and weiss 2006 ge 2008 iyigun and walsh 2007 on the basis of this literature we construct a life cycle model that includes potential costs and benefits from the labor market and marriage market which determine individual college decisions in our model individuals with differing learning abilities first decide whether or not to enter college then they might get married and have children parents are altruistic and value their children s learning ability which increases with the parents education forward looking individuals take into account the impact of their own schooling on their children s learning ability other factors that affect an individual s decision on whether to pursue higher education include the expected direct labor market returns to college over one s lifetime the expected marriage market returns to college and the financial and effort costs of attending college these costs and benefits can differ by gender we calculate from panel study of income dynamics psid and current population survey cps parents education distributions the life cycle profiles of single marriage and divorce probabilities by education and the lifecycle profiles of earnings by education and marital status as exogenous inputs of the model we observe that the number of college educated parents increases over time in the marriage market a substantial increase of single probabilities and an increase of divorce probabilities has occurred for both genders regardless of college attainment status lifetime earnings by cohort are decreasing slowly for males of all marital statuses especially for married males lifetime earnings for married and divorced females are increasing gradually whereas those for single females are decreasing slightly to formally endogenize those changes is beyond the scope of our paper we instead focus on the mechanism in which under perfect foresight these changes affect education decisions we estimate the parameters of the model by matching data on college attainment by gender from the psid we present evidence on how well the model fits the data we then use the parameter estimates to simulate counterfactual experiments which break down the sources of changes in college attainment into the effects of changes in relative earnings changes in parental education and changes in the marriage market what accounts for the increase in college attainment over the past few decades we find that the increasing gap in earnings between college and high school graduates has important effects on the increase in college attainment for both genders when earnings are fixed at 1946 cohort levels attainment rates in 1996 drop by 15 5 and 14 2 percentage points for males and females respectively we also emphasize the importance of intergenerational persistence in schooling on the increase in college attainment for both genders

mothers and sons preference formation and female labor force dynamics this paper argues that the growing presence of a new type of man one brought up in a family in which the mother worked has been a significant factor in the increase in female labor force participation over time we present cross sectional evidence showing that the wives of men whose mothers worked are themselves significantly more likely to work we use variation in the importance of world war ii as a shock to women s labor force participation as proxied by variation in the male draft rate across u s states to provide evidence in support of the intergenerational consequences of our propagation mechanism

robots computers and the gender wage gap abstract we analyze the effects of two automation technologies industrial robots and computing equipment on the gender wage gap in us local labor markets between 1990 and 2015 we find distinct impact of robot and computer capital an increase in robots decreases male wage more than female wage whereas an increase in computers reduces female wage more than male wage according to our estimates one additional unit of robot per thousand workers reduces gender wage gap by 0 3 log points and by contrast an increase in computer capital by one million dollars per thousand workers increases gender wage gap by 4 1 log points

endowments and the allocation of schooling in the family and in the marriage market the twins experiment 03 we show how comparisons between the within twin correlations of human capital outcomes across identical and nonidentical twins can be used to identify the variability in the individual specific component of endowments and the responsiveness of schooling to individual specific endowments in the family and in the marriage market even when schooling is measured with error estimates from two twins samples indicate that 27 42 percent of the variance in log earnings obesity is due to variability in individual specific endowments allocations of schooling reinforce specific endowments and individual specific earnings endowments of men and their wives schooling are negatively associated

educational homogamy positive assortative mating and income inequality in south africa an unconditional quantile regression analysis apart from being the first attempt at investigating the impact of education based homogamy and positive assortative mating on income inequality in a developing country context with very high levels

nonparametric panel estimation of labor supply in this article we estimate structural labor supply with piecewise linear budgets and nonseparable endogenous unobserved heterogeneity we propose a two stage method to address the endogeneity iss

college entry by blacks since 1970 the role of college costs family background and the returns to education college enrollment of black 18 19 year old high school graduates declined from 1980 through 1984 and then rebounded after 1984 this paper presents data from a time series of cross sections of 18 19 year old youths from 1973 through 1988 to test the role of family background direct college costs local economic conditions and returns to college in driving these trends the evidence suggests that on the one hand increases in direct college costs were driving enrollment rates downward throughout the eighties on the other hand dramatic increases in average parental education for black youths exerted upward pressure on college enrollment by blacks particularly in the latter half of the decade the net effect of these two factors contributed to the pattern of decline and recovery observed during the eighties