quick job entry or long term human capital development the dynamic effects of alternative training schemes this study evaluates and compares the eectiveness of two alternative training schemes for the unemployed short job search oriented training and long human capital oriented training we investigate the impact dynamics of these pro grams considering both unemployment and employment duration our analysis uses a rich administrative longitudinal data set for germany where both programs were implemented at the same time our estimation strategy flexibly accounts for dy namic selection on observables and unobservables as well as heterogeneous treatment eects the results indicate that short term training schemes can be an eective tool to reduce unemployment in the long run in particular if participation occurs early during unemployment long term training schemes increase the average du ration of employment spells more strongly than short term training however they increase the expected unemployment duration if they are started early during un employment this negative short run impact of long term training is an important driver of its overall eectiveness

rational household labor supply traditionally household behavior is derived from the maximization of a unique utility function in this paper we propose an alternative approach in which the household is modeled as a two member collectivity taking pareto efficient decisions the consequences of this assumption are analyzed in a three good model in which only total consumption and each member s labor supply are observable if the agents are assumed egoistic i e they are only concerned with their own leisure and consumption it is possible to derive falsifiable conditions upon household labor supplies from both a parametric and nonparametric viewpoint if alternatively agents are altruistic restrictions obtain in the nonparametric context useful interpretation stems from the comparison with the characterization of aggregate demand for a private good economy

bidimensional matching with heterogeneous preferences education and smoking in the marriage market we develop a frictionless matching model under transferable utility where individuals are characterized by a continuous trait and a binary attribute the model incorporates attributes for which there are heterogeneous preferences in the population regarding their desirability that is the impact of the traits cannot be summarized by a one dimensional attractiveness index we present a general resolution strategy based on optimal control theory and characterize the stable matching we then consider education and smoking status further specify the model by observing that there are more male than female smokers above each education level and derive additional predictions about equilibrium matching patterns and how individuals with different smoking habits marry down or marry up by education using the cps march and tobacco use supplements for the period 1996 to 2003 we find that the hypotheses based on our model predictions are borne out in the data

effects of family background on earnings and returns to schooling evidence from brazil we investigate whether omitted family background variables are responsible for high returns to schooling estimated in brazil returns to schooling fall by about one third when parental schooling is added to wage equations surprisingly the schooling of fathers in law has larger effects on wages than the schooling of fathers on the basis of a model of assortative mating we interpret this as evidence that parental characteristics represent unobservable worker attributes rather than nepotism in the labor market we conclude that the family background bias in returns to schooling is modest and need not imply returns to family connections

marriage meets the joneses relative income identity and marital status abstract this paper investigates the effect of relative income on marriage accounting flexibly for absolute income the ratio between a man s income and a local reference group median is a strong predictor of marital status but only for low income men relative income affects marriage even among those living with a partner a 10 percent higher reference group income is associated with a 2 percent reduction in marriage we propose an identity model to explain the results

job durations with worker and firm specific effects mcmc estimation with longitudinal employer employee data we study job durations using a multivariate hazard model allowing for worker specific and firm specific unobserved determinants the latter are captured by unobserved heterogeneity terms or random effects one at the firm level and another at the worker level this enables us to decompose the variation in job durations into the relative contribution of the worker and the firm we also allow the unobserved terms to be correlated in a model that is primarily relevant for markets with small firms for the empirical analysis we use a portuguese longitudinal matched employer employee dataset the model is estimated with a bayesian markov chain monte carlo mcmc estimation method the results imply that unobserved firm characteristics explain almost 40 of the systematic variation in log job durations in addition we find a positive correlation between unobserved worker and firm characteristics 2012 american statistical association

bequest as a public good within marriage a note bequest to and marriage of children can lead to a pareto inefficient allocation the inefficiency or market failure arises because one family making a bequest to its own child ignores the contribution to the utility of the other family whose child enters the marriage this note shows that an assortative mating rule based on bequests can improve or even restore pareto efficiency when parents take account of the rule in deciding the amount of bequests to their own children

an econometric analysis of the european commission s merger decisions abstract using a sample of 96 mergers notified to the european commission and logit regression techniques we analyse the commission s decision process we find that the probability of a phase 2 investigation and of a prohibition of the merger increases with the parties market shares the probabilities increase also when the commission finds high entry barriers or that the post merger market structure is conducive to collusion we do not find significant effects of political variables such as the nationality of the merging firms

love and taxes and matching institutions we study a setting with search frictions in the marriage market and with incomplete contracting inside the family everyone prefers a partner that has high income and is a perfect emotional match but compromises must often be struck a high income earner may abstain from marrying a low income earner even though they would be a perfect match emotionally because the highincome earner may dislike the implicit income redistribution implied by the marriage redistributive income taxation may ease this problem income matching institutions that secure that people largely from the same income groups meet each other can substitute for redistribution so that optimal redistribution is reduced we also introduce a divorce option redistributive taxation is shown both to further and stabilize marriage

collective female labour supply theory and application this article deals with female labour supply in the collective framework it studies married couples and starting from the empirical observation that the husband s labour supply is generally fixed at full time it shows that in this case structural elements of the decision process such as individual preferences or the rule that determines the intra household distribution of welfare can be identified if household demand for at least one commodity together with the wife s labour supply is observed these theoretical considerations are followed by an application using french data

why dowry payments declined with modernization in europe but are rising in india in contrast to most dowry oriented societies in which payments have declined with modernization those in india have undergone significant inflation over the last five decades this paper explains the difference between these two experiences by focusing on the role played by caste the theoretical model contrasts caste and non caste based societies in the former there exists an inherited component to status caste that is independent of wealth and in the latter wealth is the primary determinant of status modernization is assumed to involve two components increasing average wealth and increasing wealth dispersion within status or caste groups the paper shows that in caste based societies the increases in wealth dispersion that accompany modernization necessarily lead to increases in dowry payments whereas in non caste based societies increased dispersion has no real effect on dowry payments and increasing average wealth causes the payments to decline

marriage and consumption insurance what s love got to do with it when markets are incomplete individuals may choose to marry to diversify their labor income risk love however can complicate the picture if love is fleeting or the resolution of agents income uncertainty occurs predominantly later in life then marriages with good economic matches last longer in contrast if love is persistent and the resolution of uncertainty to agents income occurs early then marriages with good economic matches are more likely to be caught short with too little love to save a marriage consequently once married the partners will be more likely to divorce evidence is provided to distinguish between these alternative scenarios

the strategic bequest motive although recent research suggests that intergenerational transfers play an important role in aggregate capital accumulation our understanding of bequest motives remains incomplete we develop a simple model of strategic bequests in which a testator influences the decisions of his beneficiaries by holding wealth in bequeathable forms and by conditioning the division of bequests on the beneficiaries actions the model generates falsifiable empirical predictions that are inconsistent with other theories of intergenerational transfers we present econometric and other evidence that strongly suggests that bequests are often used as compensation for services rendered by beneficiaries

gorman and musgrave are dual an antipodean theorem on public goods abstract this paper examines the conditions under which the allocation branch of the government can determine the optimum provision of public goods independently of the distribution of private goods we draw attention to the duality with the literature on aggregation over consumers private goods economies

discretionary policy and multiple equilibria in lq re models we study discretionary equilibria in dynamic linear quadratic rational expectations models in contrast to the assumptions that pervade this literature we show that these models do have multiple equilibria in some situations we demonstrate the existence of multiple discretionary equilibria by example we investigate general properties of discretionary equilibria and discuss implications for numerical algorithms

for love or money the impact of income taxes on marriage higher sometimes lower than their combined single income tax obligations in this paper we explore the impact of the federal individual income tax as well as other economic and demograplhic variables on the marriage decisionis of individuals using longitudinal data from the panel study on income dynamics for the period 1968 92 we estimate a discrete time hazard model of the time to first marriage we find that the probability of marriage is significantly affected by a range of economic and demographic variables importantly we find that an increase in total income taxes paid by married versus single women has a negative effect on the likelihood of marriage and that the change in the marginal tax rate is also a significant determinant of marriage in some cases in contrast the tax effects are rarely significant in determining marriage probabilities among men although there are some differential responses by race in general the impacts of the income tax variables even when statistically significant are small

does experience make you tougher evidence from competition law this article investigates experience effects for public officials using a unique data set of companies investigated under uk competition law we find very strong experience effects for chairmen of investigation panels estimated from the increase in experience of individual chairman probit and iv probit regressions indicate that replacing an inexperienced chairman with one of average experience increases the probability of a guilty outcome by approximately 30 and after chairing around 30 cases a chairman is predicted to find almost every case guilty

cohabitation marriage and divorce in a model of match quality the objective of this research is to further our understanding of how and why individuals enter and leave coresidential relationships we develop and estimate an economic model of nonmarital cohabitation marriage and divorce that is consistent with current data on the formation and dissolution of relationships jovanovic s journal of political economy 87 1979 972 90 theoretical matching model is extended to help explain household formation and dissolution behavior implications of the model reveal what factors influence the decision to start a relationship what form this relationship will take and the relative stability of the various types of unions the structural parameters of the model are estimated using longitudinal data from a sample of female high school seniors from the united states new numerical methods are developed to reduce computational costs associated with estimation the empirical results have interesting interpretations given the structural model they show that a significant cause of cohabitation is the need to learn about potential partners and to hedge against future bad shocks the estimated parameters are used to conduct several comparative dynamic experiments for example we show that policy experiments changing the cost of divorce have little effect on relationship choices

duration dependence versus unobserved heterogeneity in treatment effects swedish labor market training and the transition rate to employment summary the effect of a treatment on the hazard rate of a duration outcome may depend on the elapsed time since treatment in addition treatment effects may be heterogeneous across agents the former gives rise to duration dependence of the treatment effect whereas unobserved heterogeneity gives rise to spurious duration dependence of the observable hazard rate we develop a model allowing for duration dependence and unobserved heterogeneity in the treatment effect the model incorporates a timing of events model and allows for selectivity on unobservables we prove identification exploiting variation in the timing of treatment and outcome in the application we analyze the effects of the swedish vocational employment training program on the individual transition rate from unemployment to work we demonstrate the appropriateness of the approach by studying the enrollment process the data cover the population and include multiple unemployment spells for many individuals the results indicate a large significantly positive effect on exit to work shortly after exiting the program the effect at the individual level diminishes after some weeks when taking account of the time spent in the program the effect on the mean unemployment duration is small copyright 2012 john wiley sons ltd

beauty vs earnings gender differences in earnings and priorities over spousal characteristics in a matching model abstract i develop a model of marriage matching where males and females care about two distinct characteristics of their spouse beauty and earnings each individual s beauty is exogenous but earnings depend on human capital investments made by each individual prior to entering the marriage market i show that even if males and females constitute ex ante identical populations with identical underlying preferences and equal access to human capital investment and labor market opportunities there can still exist an equilibrium where on average one gender invests more in human capital than the other and moreover members of one gender are more likely to prioritize beauty over earnings in a spouse while members of the other gender are more likely to prioritize a potential spouse s earnings over beauty

what determines cartel success following george stigler 1964 many economists assume that incentive problems undermine attempts by firms to collude to raise prices and restrict output but the potential profits from collusion can create a powerful incentive as well theory cannot tell us a priori which effect will dominate whether or when cartels succeed is thus an empirical question we examine a wide variety of empirical studies of cartels to answer the following questions 1 can cartels succeed 2 if so for how long 3 what impact do cartels have 4 what causes cartels to break up we conclude that many cartels do survive and that the distribution of duration is bimodal while the average duration of cartels across a range of studies is about five years many cartels break up very quickly i e in less than a year but there are many others that last between five and ten years and some that last decades limited evidence suggests that cartels are able to increase prices and profits to varying degrees cartels can also affect other non price variables including advertising innovation investment barriers to entry and concentration cartels break up occasionally because of cheating or lack of effective monitoring but the biggest challenges cartels face are entry and adjustment of the collusive agreement in response to changing economic conditions cartels that develop organizational structures that allow them the flexibility to respond to these changing conditions are more likely to survive price wars that erupt are often the result of bargaining issues that arise in such circumstances sophisticated cartel organizations are also able to develop multipronged strategies to monitor one another to deter cheating and a variety of interventions to increase barriers to entry

assortative mating and female labor supply this paper investigates married women s hours worked disaggregated by the husband s wage decile in the united states this pattern has changed from downward sloping to hump shaped we show that this development can be explained within a standard household model of labor supply when taking into account trends in assortative mating a quantitative analysis of our model shows that female wage growth and decreasing fertility are primarily responsible for the overall increase in wives hours since the 1970s the fact that the most pronounced increases are observed for wives married to high wage men is a result of trends in assortative mating

customs and incentives in contracts this article examines contractual practices that are often assumed customary in particular it examines discreteness in agricultural contracts and focuses on the distinction between the use of simple discrete fraction terms in cropshare contracts and the nearly continuous payment terms used in cash rent contracts we show that the pattern of shares is best explained as a response to moral hazard problems spread over large numbers of inputs a contracting model explains the pattern of shares the difference in flexibility with cash rent contracts and the lower bound on shares empirical analysis using micro data on over 3 000 contracts are used to test implications of the model a wide range of support is found for a model based on moral hazard and measurement costs copyright 2009 oxford university press

an evaluation of the swedish system of active labour market programmes in the 1990s we investigate the presence of short and long term effects from joining a swedish labor market program vis a vis more intense job search in open unemployment overall the impact of the program system is found to have been mixed joining a program has increased employment rates among participants a result robust to a misclassification problem in the data on the other hand it has also allowed participants to remain significantly longer on unemployment benefits and more generally in the unemployment system this being particularly the case for those entitled individuals entering a program around the time of their unemployment benefits exhaustion

demographic variables in demand analysis in this paper the authors discuss five procedures for incorporating demographic variables into theoretically plausible demand systems translating scaling and the gorman reverse gorman and implicit prais houthakker procedures these five procedures are used to incorporate a single demographic variable the number of children in a household into the generalized ces demand system using household budget data for the united kingdom for the period 1966 1972 excerpt

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

the intergenerational transmission of risk and trust attitudes recent theories endogenize the attitude endowments of individuals assuming that they are shaped by the attitudes of parents and other role models this paper tests empirically for the relevance of three aspects of the attitude transmission process highlighted in this theoretical literature 1 transmission of attitudes from parents to children 2 an impact of prevailing attitudes in the local environment on child attitudes and 3 positive assortative mating of parents which enhances the ability of a parent to pass on his or her attitudes to the child we focus on two fundamentally important attitudes willingness to take risks and willingness to trust others we find empirical support for all three aspects providing an empirical underpinning for the literature an investigation of underlying mechanisms shows that socialization is important in the transmission process various parental characteristics and aspects of family structure are found to strengthen the socialization process with implications for modeling the socialization production function and for policies focused on affecting children s non cognitive skills the paper also provides evidence that the transmission of risk and trust attitudes affects a wide variety of child outcomes implying a potentially large total effect on children s economic situation

do alternative opportunities matter the role of female labor markets in the decline of teacher quality abstract this paper documents the widely perceived but little investigated notion that teachers today are less qualified than they once were evidence of a marked decline in the quality of young women going into teaching between 1960 and 1990 is presented using standardized test scores undergraduate institution selectivity and positive assortative mating characteristics as indicators of quality in contrast the quality of young women becoming professionals increased the roy model of self selection highlights how occupational differences in the returns to skill determine teacher quality estimates suggest the significance of increasing professional opportunities for women in affecting the decline in teacher quality

do you have time to take a walk together private and joint time within the household we develop a theoretical model for the intra household allocation of time and consumption the model distinguishes between the partners joint and private leisure time we estimate the parameters of our model on a danish time use survey with information on time allocation and expenditures the empirical estimation leads to four main conclusions first we fi nd that assignable expenditures vary with female and male wage rates consistent with the collective model and we can assign this variation to the pareto weight being sensitive to relative wages second we fi nd that men put more weight on both their own private expenditure and composite leisure than women third we fi nd that joint leisure and individual leisure are not perfect substitutes for partners fourth we observe that both joint and private leisure are independent of the wage distribution thus togetherness is not a substitute for economic factors fifth we find that when the female wage goes up all else equal her child care hours increase while her husband s child care hours decrease

a direct test of the efficient marriage market hypothesis this paper takes gary becker s theory of marriage seriously in his seminal paper becker 1973 proposes an invisible hand theorem for the marriage market he argues that the competition for spouse leads men and women to be matched in such a way that maximizes the sum total of marital output applications of the economic approach to marriage are now commonplace becker et al 1977 study the effect of imperfect information on divorce benham 1974 scully 1979 and wong 1986 estimate the effect of wife s education on husband s earnings grossbard shechtman 1993 and rao 1993 focus on the effect of sex ratio on implicit or explicit bride prices or dowries the literature however has virtually ignored becker s hypothesis that marriage markets maximize total marital output i e that marriage markets are efficient mistakes are no doubt made in marriage decisions the marriage market is not a text book example of perfect competition because of elaborate social norms substantial search costs and room for bargaining and opportunistic behavior nevertheless we intend to push becker s efficient marriage market model at face value and directly confront it with data the hypothesis that the marriage market maximizes marital output provides a framework that allows estimating a model of spouse selection which recovers some of the parameters of the production function for marital output using the estimated parameters we can use programming techniques to find the optimal male female pairing that maximizes the sum of marital output the degree to which the actual pairing of husbands and wives corresponds to the optimal pairing provides a goodness of fit test of the efficient marriage market hypothesis our method is applied to census data in hong kong a model of spouse selection and other matching models differs from a discrete choice model e g mcfadden 1984 in two important ways first the choice of a spouse is mutual not only does each man choose a woman that yields him the highest net utility but each woman also picks a man that gives her the highest net utility second in a discrete choice model several individuals can choose the same alternative in marriage markets this is prohibited under monogamy thus new methods have to be developed to analyze choice in marriage markets although marital output and the shadow price of husbands and wives are not observable the theory of optimal matching allows us to write down the likelihood function for the observed choice of marital partners it turns out that this model of spouse selection reduces to a version of the tobit model under the assumption that error terms are independently and identically normal in multinomial logit models the interpretation of parameters is cumbersome especially when the number of alternatives is large in our model of spouse selection the estimated parameters are directly related to the production function of marital output the signs of these parameters can be used to address the issue of positive versus negative assortative mating the model can also be used to test marginal product pricing in the marriage market with the estimated production function from the model of spouse selection we can impute the marital output for all possible male female pairs using these imputed output figures the optimal pairing between men and women that maximizes the sum of marital output can be found using an algorithm that solves the assignment problem the degree to which this optimal pairing corresponds to the observed pairing then provides a natural way of assessing marriage market efficiency given the limited range of information contained in the census we find that our model of spouse selection fits the observed choices better than other models such as one based on ranking method following varian s 1990 proposal for goodness of fit tests for optimizing models we derive a measure of efficiency which is based on the distance between total imputed marital output under observed matching and that under optimal matching

who holds the purse strings within the household the determinants of intra family decision making abstract we study the determinants of intra household decision making responsibility over economic and financial choices using a direct measure provided in the 1989 2010 bank of italy survey of household income and wealth we find that the probability that the wife is responsible for decisions increases as the wife s characteristics in terms of age education and income become closer or even higher than those of her husband s thus consistently with a bargaining approach decision making responsibility is associated with marriage heterogamy and not only along strictly economic dimensions however in support of an alternative household production approach we also find that the probability that the wife is responsible is lower when she is employed which suggests the presence of a specialization pattern assigning responsibility to the spouse with more available time our results are robust to additional controls and alternative samples

family ties and labor markets in the united states and brazil we use comparable surveys from brazil and the united states to examine vertical and horizontal connections between families motivated by a model of assortative mating and intergenerational transmission of schooling and earnings we include the schooling of relatives in male wage equations we find that the effect offather in law s schooling is larger than the effect offather s schooling in brazil while the opposite is observed in the united states we interpret these effects as indicators of unobservable worker characteristics with differences in assortative mating and female labor market activity explaining the differences in the apparent effect of fathers and fathers in law in the two countries

spending time and money within the household we consider both theoretically and empirically the allocation of time and money within the household the research question is whether a married person who enjoys more leisure than their partner also receives more consumption which seems to indicate the outcome of power within the household or receives less consumption which seems to indicate differing intrahousehold preferences we develop a simple parametric structural model with household production that is tested on survey data we find that relative wages have an impact on power for leisure this effect is dominated by a conventional wage effect in which the partner who has the higher wage takes less leisure

potential foreign competition in us manufacturing abstract trade barriers are falling and firms are competing in increasingly open international markets the data reveal considerable heterogeneity across industries in the intertemporal path of import shares against this backdrop we focus on an issue that is increasingly important for competition policy analysis potential foreign competition inadequate attention to this aspect could result in a biased picture of total competition leading to misguided antitrust decisions drawing on the conceptual framework outlined by landes and posner harvard law review 94 1981 937 we measure potential foreign competition by the intertemporal response of industry import share to industry specific and aggregate economic factors and our estimates indicate wide variation across industries in this dimension a particularly striking finding is that highly concentrated industries which are more likely to be subject to antitrust scrutiny have a greater degree of potential foreign competition than industries with low concentration even though the extent of actual foreign competition is similar across these groups of industries

monopoly in the uk what determines whether the mmc finds against the investigated firms this paper draws on data from 73 uk monopolies and mergers commission reports on monopoly between 1973 and 1995 it shows that there is a roughly two in three chance that the commission will come to an adverse conclusion against the investigated firms in a given case 75 80 of decisions can be explained purely in terms of the market share of the leading firm and knowledge of the broad nature of the alleged anti competitive practice an adverse finding is most likely in cases involving exclusive dealing and least likely where other vertical restraints are involved

should we get married the effect of parents marriage on out of wedlock children i introduction while marriage remains the foundation of family life in the united states the traditional process of family formation specifically marriage before having children has been dwindling the proportion of american children born to unmarried parents has increased dramatically over the past three decades from 12 in 1970 to nearly one third of all births today siglerushton and mclanahan 2002 the decoupling of marriage and fertility behavior is particularly common among the low income less educated urban population mclanahan and sandefur 1994 unmarried parents often have fewer resources and their children tend to display inferior outcomes compared to those raised by two married parents 1 concerned with the rise in out of wedlock parenthood and its implications for the children involved policies in recent years have been geared toward promoting marriage among unmarried parents 2 however little is known about the potential benefits of marriage after childbirth couples who have children out of wedlock are known to be selectively different from those who marry before having children unmarried parents tend to be of lower socioeconomic standing face poorer prospects in the marriage market and have lower incentives for assortative mating brown 2004 garfinkel glei and mclanahan 2002 rosenzweig 1999 hence interpreting the outcome differences found in simple comparisons of children born to married versus unmarried parents as benefits of marriage can be misleading as these differences may largely reflect the more favorable characteristics of married parents this study examines whether marriage between the biological parents after childbearing benefits the children involved using data on a representative sample of children all born to unmarried couples drawn from the fragile families and child wellbeing study ffcws the ffcws is particularly well suited to address this question as it provides child assessment data and detailed marriage fertility and socioeconomic information on both biological parents for a large representative sample of children born outside of marriage we focus on the effect of marriage among parents who are romantically involved at childbirth on child cognitive ability measured at age 3 based on scores from the peabody picture vocabulary test ppvt a widely used interviewer administered measure of receptive hearing and verbal ability in addition effects of marriage on child health and behavioral outcomes are analyzed a significant fraction of children in our sample experience the marriage of their parents we analyze whether marriage after childbearing affects early developmental outcomes using an empirical strategy centering around a potential outcome framework similar to an experiment where the treatment marriage after childbirth is randomly assigned we draw on matching methods e g heckman ichimura and todd 1998 rosenbaum and rubin 1983 to identify the treatment effect exploiting the detailed information on the parents provided in the ffcws this approach addresses the selection into marriage by constructing an appropriate comparison group for children whose parents marry after childbirth we first estimate the probability of marriage among unwed parents with a newborn and then compare the outcomes of children whose parents share similar probabilities of marriage but differ only in whether their parents transitioned into marriage within 3 yr after their birth the present study also sheds light on the role of typically unobserved factors likely to be important determinants of selection into marriage including the father s attributes and the degree to which the parents have similar characteristics positive assortative matching while some studies have examined the determinants of marital union formation among the population of single mothers e g aassve 2003 relatively little is known about the factors influencing the transition into marriage and the role of similarities in traits between unmarried biological parents

married with children a collective labor supply model with detailed time use and intrahousehold expenditure information we propose a collective labor supply model with household production that generalizes an original model of blundell chiappori and meghir 2005 in our model adults individual preferences not only depend on own leisure and individual private consumption of market goods they also depend on the consumption of domestic goods which are produced by combining goods bought on the market with individuals time we apply our model to new and unique data on dutch couples with children the data contains detailed information about the spouses time use and the intrahousehold allocation of all expenditures our application uses a novel estimation strategy that builds upon the familiar two stage allocation representation of the collective model we obtain interesting and plausible empirical results spouses preferences depend on the consumption of domestically produced goods including children s welfare in addition pareto weights depend on variables like the individual wages and the share in the household s nonlabor income finally and perhaps surprisingly we do not nd evidence that mothers care more for their children than fathers this paper draws on data of the liss panel of centerdata special thanks go to marika de bruijne and arthur van soest who helped to construct the questionnaire and to guillaume schollier

spouse selection and earnings evidence of marital sorting michael a zimmer this article investigates economic bases for individuals selection of marriage partners its central focus is matching of spouse pairs based on unobservable components of hourly earnings using a data extract from the panel study of income dynamics we have observations of individuals wages before and immediately after marriage along with their spouses earnings after marriage we exploit the data to estimate the relation between spouses wage residuals the evidence supports positive marital matching on the basis of earnings the results are robust with respect to variations in the statistical framework of the model jel j12 i introduction the process by which marriages are formed has long attracted the attention of social scientists research has suggested that individuals choose spouses similar to themselves in physical and social traits such as height and ethnicity an area of interest in recent years has been the economic basis of spouse selection beginning with becker 1974 economists focused on earnings characteristics of spouses becker argued that since in most cultures males specialize in market production spouse selection matches high wage males with females who specialize in home production and rearing of families empirical research on becker s hypothesis has produced mixed results in several studies the strategy has been to estimate earnings regressions from samples of existing married couples and then obtain correlations between the ensuing earnings residuals of spouses the correlations are used as indexes of marital sorting in earnings after controlling for measured factors such as schooling age and work experience smith 1979 used census data to estimate residual correlations for black and white couples he obtained estimates of 0 035 for whites and 0 216 for blacks becker 1981 used the 1967 survey of economic opportunity to obtain partial correlations of 0 32 for whites and 0 24 for blacks zimmer 1996 examined earnings correlations among low income marriages although his evidence supports becker s hypothesis of negative assortative mating with respect to wages the results are not consistent across race groups lam 1988 provided an explanation of positive assortative mating with respect to wealth and wages be also established elasticities of spouses hours worked and demands for household goods with respect to wages that would produce positive assortative mating several recent studies have addressed the apparent earnings premium of married males relative to single males nakosteen and zimmer 1997 and cornwell and rupert 1997 argued that married men are observed to earn more than singles because high earning males possess unobserved traits that make them attractive prospects for marriage but here too the evidence is mixed korenmann and neumark 1991 suggested that married males earn more than singles because marriage tends to make them more productive thereby enhancing their earnings prospects these studies have not paid attention to assortative mating per se focusing instead on earnings of husbands in the single versus married state the purpose of this study is to return to the issue of spouse matching on the basis of earnings our empirical strategy based on several waves of data from the panel study of income dynamics psid differs from the articles first cited above by attempting to capture the earnings residual of one spouse prior to marriage and relating it to the residual of his partner in a period shortly after marriage in this manner we do not rely as heavily on the use of ongoing marriages as in the early studies the following section describes our statistical approach in more detail section iii describes the data and specification of the earnings models sections iv and v present results of estimation and section vi concludes the article our results provide broad support for the hypothesis of positive assortative mating with respect to earnings

for richer for poorer assortative mating and savings preferences do couples share the same values the social sciences have mainly concentrated on comparing the socioeconomic characteristics of spouses but rarely consider their attitudes to risk and time in this paper we use conventional measurements and an original method of scoring we find that spouses are very similar in their savings preferences even when we control for the individual characteristics our results suggest that most of this relationship comes from marital sorting these conclusions are decisive in explaining the decision process within households and its implications for wealth inequalities between households since homogamy causes a divide in the population

a fresh look at the rotten kid theorem and other household mysteries gary becker s rotten kid theorem asserts that if all family members receive gifts of money income from a benevolent household member then even if the household head does not precommit to an incentive plan for family members it will be in the interest of selfish family members to maximize total family income i show by examples that the rotten kid theorem is not true without assuming transferable utility i find a simple condition on utility functions that is necessary and sufficient for there to be the kind of transferable utility needed for a rotten kid theorem while restrictive these conditions still allow one to apply the strong conclusions of the rotten kid theorem in an interesting class of examples

the perverse effects of high brideprices marriage payments are conventionally explained by economists as resulting from the operation of market forces characteristically this type of explanation rests on the assumption that the individuals concerned do not behave strategically when strategic behavior is posited parents are able to anticipate the perverse effects of high brideprices on their daughter s happiness and on the probability of break up of her marriage as a result brideprices may be set at levels lower than those justified by the brides relative scarcity in the marriage market using both quantitative and qualitative evidence such a strategic approach is tested on the basis of original data collected in the senegal river valley c 2007 elsevier ltd all rights reserved

positive assortative mating and spouses as complementary factors of production a theory of labour augmentation this article develops a model of intellectual labour augmentation to explain both the marriage wage premium and educational assortative mating we suggest that husbands and wives are complementary factors of production where a spouse s education and skills augment their partner s productivity and earnings potential we test this proposition using data from the 2000 us census of population and the 2003 current population survey our results indicate that for working couples the marriage premium for husbands and wives is directly related to the education level of their spouses suggesting that positive assortative mating may be attributable to the labour market effects of intellectual augmentation of married households

information shocks and the empirical evaluation of training programs during unemployment spells we study the role of notifications in the evaluation of training programs for unemployed workers using a unique administrative data set containing the dates when information is exchanged between job seekers and caseworkers we address three questions do information shocks such as notification of future training have an effect on unemployment duration what is the joint effect of notification and training programs on unemployment can ignoring information shocks lead to a large bias in the estimation of the effect of training programs we discuss these issues through the lens of a job search model and then conduct an empirical analysis following a random effects approach to deal with selectivity we find that notification has a strong positive effect on the training probability but a negative one on the probability of leaving unemployment this attraction effect highlights the importance of accounting for notifications in the evaluation of active labor market policies

marriage markets and assortative mating with household public goods theoretical results and empirical implications this paper analyzes marriage market equilibria when the gains from marriage result from joint consumption of household public goods assuming transferable utility within marriage the paper proves that marriage markets will be characterized by positive assortative mating on wealth when spouses differ only in endowments and the gains to marriage result only from public goods when spouses differ in wages and household public goods are produced at home the results imply offsetting effects with public good economies creating an incentive for positive assortative mating on wages and gains from specialization creating an incentive for negative assortative mating on wages the results help explain the persistent lack of empirical support for becker s prediction of negative assortative mating on wages and have implications for empirical analysis of all joint living arrangement decisions

collective labour supply with children we extend the collective model of household behavior to allow for the existence of public consumption we show how this model allows the analysis of welfare consequences of policies aimed at changing the distribution of power within the household our setting provides a conceptual framework for addressing issues linked to the targeting of specific benefits or taxes we also show that the observation of the labor supplies and the household demand for the public good allow one to identify individual welfare and the decision process this requires either a separability assumption or the presence of a distribution factor

independence of allocative efficiency from distribution in the theory of public goods when is the pareto optimal amount of public goods independent of income distribution subject to some regularity conditions the answer is when preferences of every individual i can be represented by a utility function of the form u x i y a y x i b i y where x i is i s consumption of private goods and y is the amount of public goods

the effectiveness of public sponsored training revisited the importance of data and methodological choices this article revisits the effectiveness of public sponsored training programs for germany accounting for dynamic selection into heterogeneous programs we carefully assess to what extent various aspects of our empirical strategy such as conditioning flexibly on employment and benefit histories the availability of rich data handling of later program participations and further methodological choices affect our estimates our results imply pronounced negative lock in effects in the short run and positive medium run effects on employment and earnings when job seekers enroll after having been unemployed for some time we find that data and specification issues can have a large effect

gender identity and relative income within households band s income we argue that this pattern is best explained by gender identity norms which induce an aversion to a situation where the wife earns more than her husband we present evidence that this aversion also impacts marriage formation the wife s labor force participation the wife s income conditional on working marriage satisfaction likelihood of divorce and the division of home production within marriage markets when a randomly chosen woman becomes more likely to earn more than a randomly chosen man marriage rates decline in couples where the wife s potential income is likely to exceed the husband s the wife is less likely to be in the labor force and earns less than her potential if she does work in couples where the wife earns more than the husband the wife spends more time on household chores moreover those couples are less satisfied with their marriage and are more likely to divorce these patterns hold both cross sectionally and within couples over time

intergenerational income mobility among daughters new evidence on daughters intergenerational mobility in a framework that encompasses women not in the labor force using broader measures of economic status than just the women s own earnings is presented and the role of husbands earnings is highlighted a parallel analysis of sons mobility is performed intergenerational transmission of income status may be weaker for daughters than for sons but is still quite substantial assortative mating is an important element in the intergenerational transmission process

how effective are unemployment benefit sanctions looking beyond unemployment exit this paper provides a comprehensive evaluation of benefit sanctions i e temporary reductions in unemployment benefits as punishment for noncompliance with eligibility requirements in addition to the effects on unemployment durations we evaluate the effects on post unemployment employment stability on exits from the labor market and on earnings in our analysis we use a rich set of swiss register data which allow us to distinguish between ex ante effects the effects of warnings and the effects of enforcement of benefit sanctions adopting a multivariate mixed proportional hazard approach to address selectivity we find that both warnings and enforcement increase the job finding rate and the exit rate out of the labor force warnings do not affect subsequent employment stability but do reduce post unemployment earnings actual benefit reductions lower the quality of post unemployment jobs both in terms of job duration as well as in terms of earnings the net effect of a benefit sanction on post unemployment income is negative over a period of two years after leaving unemployment workers who got a benefit sanction imposed face a net income loss equivalent to 30 days of full pay due to the ex post effect in addition to that stricter monitoring may reduce net earnings by up to 4 days of pay for every unemployed worker due to the ex ante effect

human capital and interethnic marriage decisions common explanations for the generally negative relationship between education and ethnic endogamy include 1 education makes immigrants and their children better able to adapt to native culture thereby eliminating the need for a same ethnicity spouse and 2 education raises the likelihood of leaving ethnic enclaves thereby decreasing the probability of meeting potential same ethnicity spouses this paper considers a third option the role of assortative matching on education if education distributions differ by ethnicity then spouse searchers may trade similarities in ethnicity for similarities in education when choosing spouses u s census data on second generation immigrants provide strong support for the assortative matching mechanism

intergenerational mobility and marital sorting we use data from the german socio economic panel and the british household panel survey to estimate the extent of intergenerational economic mobility in a framework that highlights the role played by assortative mating we find that assortative mating plays an important role on average about 40 50 of the covariance between parents and own permanent family income can be attributed to the person to whom one is married this effect is driven by strong spouse correlations in human capital which are larger in germany than britain 2006 the authors journal compilation royal economic society 2006

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

the american family and family economics abstract gary becker s path breaking treatise on the family 1981 subjected individuals decisions about sex marriage childbearing and childrearing to rational choice analysis the american family has changed radically in recent decades we survey these changes as well as the ongoing effort to understand partnering parenting and care of the elderly as results of maximizing choices made by individuals first we describe the recent changes in the american family the separation of sex marriage and childbearing fewer children and smaller households converging work and education patterns for men and women class divergence in partnering and parenting strategies and the replacement of family functions and home production by government programs and market transactions second we examine recent work in family economics that attempts to explain these changes third we point out some challenging areas for further analysis and highlight issues of commitment in two primary family relationships those b

marital matching and earnings evidence from the unmarried population in sweden social scientists have devoted substantial research to economic basis for matching of men and women in marriage a common feature of existing studies is their reliance on samples of married couples the principal shortcoming of spouse data is that spouses earnings correlations are contaminated by the partners behaviors and other events that occur after marriage and affect their earnings this study addresses that problem by exploiting a longitudinal data file from the swedish population by selecting a sample of married couples in a given year we retreat through the file to years before the marriage using data from the spouses single years we apply the correlation methodology to their earnings evidence from the model supports positive assortative mating

the economics of fatherhood the growth of nonmarital fertility together with greatly increased divorce rates and an increased proportion of children living in femaleheaded households has provoked considerable alarm about the demise of the traditional family and concern about potentially harmful effects on the well being of women and children in this paper i briefly summarize recent attempts by myself and others to develop a coherent theoretical framework to integrate economic theories of fertility and marriage in order to better understand why the same men who play the breadwinner role within marriage may fail to support their children following a divorce or who despite the gains to marriage may prefer to father children out of wedlock rather than within marriage i argue that such behaviors of men can be understood within a framework that takes into account the selfinterests of both men and women as they interact within a given sexual or marital match and as they interact in a broader market for sexual and marriage partners at the level of a given match the theory provides hypotheses about the determinants of voluntary child support by fathers who are divorced from or have never married the mother it also suggests reasons why voluntary child support is likely to be inadequate and consequently provides some insight about the role of laws and administrative procedures designed to establish paternity determine the size of childsupport awards and enforce collection of awards at the level of the market under certain circumstances theory produces results similar to those emphasized by william wilson and katherine neckerman s 1987 theory of outof wedlock childbearing among the underclass

income and outcomes a structural model of intrahousehold allocation there is evidence from several sources that one cannot treat many person households as a single decision maker if this is the case then factors such as the relative incomes of the household members may affect the final allocation decisions made by the household we develop a method of identifying how incomes affect outcomes given conventional family expenditure data the basic assumption we make is that household decision processes lead to efficient outcomes we apply our method to a sample of canadian couples with no children we find that the final allocations of expenditures on each partner depend significantly on their relative incomes and ages and on the level of lifetime wealth

active labor market policy effects in a dynamic setting this paper develops and implements a method to identify and estimate treatment effects in a dynamic setting where treatments may occur at any point in time by combining the standard matching approach to the timing of events approach it demonstrates that the effect of the treatment on the treated at a given date can be identified although non treated may be treated later in time the approach builds on a no anticipation assumption and the assumption of conditional independence between the duration before treatment and the duration before exit to illustrate the approach the paper studies the effect of training for unemployed workers in france using a rich register data set training has little impact on unemployment duration the contamination of the standard matching estimator due to later entries into treatment is large if the treatment probability is high

imperfect competition law enforcement competition policy is a subject of often heated debate competition authorities seeking to prevent or battle anticompetitive acts in complex cases to the best of their abilities regularly find themselves advised by rival economic theories and disputed empirical analyses as a consequence there is a real possibility that they may occasionally err missing true violations of competition law or finding firms liable that actually had no other intentions than good competition in this paper possible consequences of such imperfect competition law enforcement on firm strategies are considered in a simple model of collusion it is found that the incidence of anti competitive behavior increases in both types of enforcement errors type ii errors decrease expected fines while type i errors encourage industries to collude precautionary when they face the risk of a false conviction hence fallible antitrust enforcement may stifle genuine competition thus stimulating the very behavior competition policy is meant to deter when enforcement errors are non negligible competition authorities run the risk of being over zealous in the sense that welfare is best served by an authority that is selective and conscientious in its targeting of alleged anticompetitive acts

modeling marital connections among family lines this paper examines the role of marital connections in models of intertemporal household behavior recent work by bernheim and bagwell implies that such connections might vastly expand the scope of neutrality results the present work studies several formulations including not only marriage but also descriptions of how people choose spouses purposeful choices lead to assortative mating all versions of the framework tend to lead away from cross sectional neutrality results the analysis suggests that one may be able to derive a solution for a parthenogenetic model and then interpret it as consistent with nash equilibrium behavior in a world with marriage

nonparametric instrumental variable methods for dynamic treatment evaluation we develop a nonparametric instrumental variable approach for the estimation of average treatment effects on hazard rates and conditional survival probabilities without model structure we derive constructive identification proofs for average treatment effects under noncompliance and dynamic selection exploiting instrumental variation taking place during ongoing spells we derive asymptotic distributions of the corresponding estimators this includes a detailed examination of noncompliance in a dynamic context in an empirical application we evaluate the french labor market policy reform pare which abolished the dependence of unemployment insurance benefits on the elapsed unemployment duration and simultaneously introduced additional active labor market policy measures the estimated effect of the reform on the survival function of the duration of unemployment duration is positive and significant neglecting selectivity leads to an underestimation of the effects in absolute terms

the identification of unobservable independent and spousal leisure this paper is based on the idea that for each partner in a marriage there are two distinct types of leisure one type is each person s independent or private leisure and the other type is spousal leisure whose importance has long been emphasized in the literature of psychology while each type of leisure is unobservable only total leisure is observed it is shown that the recent collective models of the intrahousehold allocation initiated by chiappori can be extended to identify each type of leisure up to an additive constant in particular the effects of each member s wage household unearned income and extrahousehold environmental parameters on the independent and spousal leisure and on the sharing rule are fully identified the observational requirement here is the same as in other studies namely the observation of individual labor supply individual wages household unearned income one assignable good and consumption expenditure at the household level