male and female marriage returns to schooling a collective marriage matching model is estimated and calibrated to quantify the share of returns to schooling that is realized through marriage the predictions of the model are matched with detailed danish household data on the relationship between schooling and wage rates the division of time and goods within the household and the extent to which men and women sort positively on several traits in marriage counterfactual analysis conducted with the model suggests that danish men and women are earning on the order of half of their returns to schooling through improved marital outcomes

the demographic transition and the position of women a marriage market perspective we present international evidence on the marriage market implications of cohort size growth and set out a theoretical model of how marriage markets adjust to imbalances since men marry younger women secular growth in cohort size in the second phase of the demographic transition worsens the position of women this e ect has been substantial in many asian countries earlier and continues to be true in sub saharan africa with fertility decline cohort are now shrinking in east asia improves the position of women these demographic trends can explain the increase and spread in dowries in south asia and the persistence of polygyny in sub saharan africa we show that the age gap at marriage will not adjust in order to equilibrate the marriage market in response to persistent imbalances even though it accommodates transitory shocks jel categories j12 j13 j16

marriage market divorce legislation and household labor supply this paper provides a theoretical framework for analyzing the impact of the marriage market and divorce legislation on household labor supply in our approach the sex ratio in the marriage market and the rules governing divorce are examples of distribution factors these factors are defined as variables that affect the household members bargaining position but not preferences or the joint budget set we extend the collective labor supply model developed by chiappori to allow for distribution factors we show that our model imposes new restrictions on the labor supply functions and eases the identification of individual preferences and the intrahousehold decision process the model is estimated using psid data for the year 1988 our results do not reject the restrictions imposed by the model also the sex ratio and divorce laws deemed favorable to women are found to affect labor supply behavior and the decision process in the directions predicted by the theory and to have sizable effects

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

efficient non contractible investments in large economies abstract do investors making complementary investments face the correct incentives especially when they cannot contract with each other prior to their decisions we present a two sided matching model in which buyers and sellers make investments prior to matching once matched buyer and seller bargain over the price taking into account outside options efficient decisions can always be sustained in equilibrium we characterize the inefficiencies that can arise in equilibrium and show that equilibria will be constrained efficient we also show that the degree of diversity in a large market has implications for the extent of any inefficiency journal of economic literature classification numbers c78 d41 d51

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

how do sex ratios affect marriage and labor markets evidence from america s second generation sex ratios i e relative numbers of men and women can affect marriage prospects labor force participation and other social and economic variables but the observed association between sex ratios and social and economic conditions may be confounded by omitted variables and reverse causality this paper uses variation in immigrant flows as a natural experiment to study the effect of sex ratios on the children and grandchildren of immigrants the flow of immigrants affected the second generation marriage market because second generation marriages were mostly endogamous i e to members of the same ethnic group the empirical results suggest that high sex ratios had a large positive effect on the likelihood of female marriage and a large negative effect on female labor force participation perhaps surprisingly the marriage rates of second generation men appear to be a slightly increasing function of immigrant sex ratios higher sex ratios also appear to have raised male earnings and the incomes of parents with young children the empirical results are broadly consistent with theories where higher sex ratios increase female bargaining power in the marriage market

a model of educational investment social concerns and inequality we consider a model in which educational investments entail productivity gains signaling power and social status the latter depends on the agent s relative achievement in one of three dimensions innate skills level of schooling and income we study the three scenarios separately and characterize the conditions under which social concerns increase or decrease educational and income inequality inequality increases decreases if education lowers the stigma suffered by low skilled workers less more than it boosts the prestige enjoyed by high skilled workers we discuss the expected results of some policies in light of these findings

the pre marital investment game abstract two sides of a finite marriage market engage in costly investment and are then matched assortatively the purpose of the investment is solely to improve the quality of the match that the trader can attain in the second stage the paper studies the limits of equilibrium of these finite matching games as the number of traders gets large it is shown that mixed nash equilibria in the finite games converge to degenerate pure strategy equilibria in the limit in which both sides of the market invest too much

wealth wages and wedlock explaining the college gender gap reversal we study the role of changes in the wage structure and expectations about marriage in explaining the college gender gap reversal with strongly diminishing marginal utility of wealth and in the presence of a gender wage gap single women have a greater incentive than single men to invest in education marriage market distortions tend to depress the overall benefit of education for women relative to men we parameterize the model using us census data for the cohort born in 1950 and show that it can generate a reversal the most important driving force is the decline in marriage rates this article is protected by copyright all rights reserved

the career costs of children this paper analyzes the life cycle career costs associated with child rearing and decomposes their eects into unearned wages as women drop out of the labor market loss of human capital and selection into more child friendly occupations we estimate a dynamic life cycle model of fertility occupational choice and labor supply using detailed survey and administrative data for germany for numerous birth cohorts across dierent regions we use this model to analyze both the male female wage gap as it evolves from labor market entry onward and the eect of pro fertility policies we show that a substantial portion of the gender wage gap is explainable by realized and expected fertility and that the long run eect of policies encouraging fertility are considerably lower than the short run eects typically estimated in the literature

pre matching gambles abstract this paper investigates pre matching gambles and provides a new reason to gamble matching concerns examples of pre matching gambles include occupational choices before the marriage market college major choices before the labor market and portfolio management before attracting future clients in the financial market i show that people make risky investments they would not have made if not for their subsequent participation in a competitive matching market a fundamental and unique feature of the competitive matching market which i call the competitive matching effect induces gambling the paper also illustrates the relationship between social efficiency and inequality in this setting and shows how progressive taxation eliminates social inefficiency reduces inequality and generates government revenue

education choices and returns to schooling mothers and youths subjective expectations and their role by gender abstract in this paper we investigate the role of expected returns to schooling and of perceived risks of unemployment and earnings as determinants of schooling decisions moreover our data also allow us to analyze whether youths and or mothers expectations predict schooling decisions and whether this depends on the age and gender of the youth in particular we use mexican data that contain labor market expectations of mothers and youths we find that expected returns and risk perceptions are important determinants of schooling decisions the latter in particular from the perspective of the mother boys expectations predict the decision to enter college but not to enter high school while girls own expectations do not predict either of the two educational decisions mothers expectations are particularly strong predictors of their daughters decisions

accounting for the timing of first marriage among first marriages in the united states grooms are on average 1 7 years older than their brides traditionally this fact is explained by sex differences in income we use a general equilibrium overlapping generations search model economy to show instead that sex differences in fecundity are essential to account for the age gap at first marriage whereas sex differences in income play a secondary role our model economy also accounts for other facts on the timing of first marriages that the literature has overlooked

determinants of college major choice identification using an information experiment this article studies the determinants of college major choice using an experimentally generated panel of beliefs obtained by providing students with information on the true population distribution of various major specific characteristics students logically revise their beliefs in response to the information and their subjective beliefs about future major choice are associated with beliefs about their own earnings and ability we estimate a rich model of college major choice using the panel of beliefs data while expected earnings and perceived ability are a significant determinant of major choice heterogeneous tastes are the dominant factor in the choice of major analyses that ignore the correlation in tastes with earnings expectations inflate the role of earnings in college major choices we conclude by computing the welfare gains from the information experiment and find positive average welfare gains

education choices and returns on the labor and marriage markets evidence from data on subjective expectations in this paper we analyze the role of expected labor and marriage market returns as determinants of the college enrollment decisions of mexican high school graduates moreover we investigate whether the relative weights of these factors differ by gender we use data on individuals expectations regarding future labor market outcomes which we directly elicited from the youths and two different measures of marriage market returns first marriage market returns are proxied by the net supply of potential partners in the youths local marriage markets second we use data which elicits youths beliefs about their future spouse s earnings conditional on their own education level we find that labor market as well as marriage market returns are important determinants of the college enrollment decision however boys and girls preferences differ in terms of the relative role of the two determinants in that the relative weight of labor market versus marriage market returns is larger for boys than for girls

a dynamic programming approach for pricing options embedded in bonds abstract we propose a dynamic programming dp approach for pricing options embedded in bonds the focus being on call and put options with advance notice an efficient procedure is developed for the cases where the interest rate process follows the vasicek cox ingersoll ross cir or generalized vasicek models our dp methodology uses the exact joint distribution of the interest rate and integrated interest rate at a future date conditional on the current value of the interest rate we provide numerical illustrations for the vasicek and cir models comparing our dp method with finite difference methods our procedure compares quite favorably in terms of both efficiency and accuracy an important advantage of the our dp approach is that it can be applied to more general models calibrated to capture the term structure of interest rates e g the generalized vasicek model

glass slippers and glass ceilings an analysis of marital anticipation and female education abstract this paper studies how marital anticipation affects female schooling in the presence of gender wage inequality and private benefits of education gender wage inequality induces a marital division of labour that creates i a marginal disincentive to girls schooling and ii a tradeoff between consumption and education facing females in marriage markets we show that in the presence of the last effect an increase in the market wage can have negative consequences for the education of females who specialise in housework

educational assortative mating and household income inequality we use data from denmark germany norway the united kingdom and the united states to document the degree of educational assortative mating how it evolves over time and the extent to which it d

gender parity and schooling choices abstractwe examine the determinants of gender differences in schooling choices using data on 290 000 secondary school applicants in ghana over a quarter of female students choose home economics as their preferred field of study compared to two per cent of males we find that schooling choices vary significantly with academic performance and educational norms higher performing female students and those from districts with a history of gender parity in educational attainment are less likely to choose home economics differences across geographic areas account for more of the variation in schooling choices than observable individual family and school level characteristics can explain

partner choice investment in children and the marital college premium abstract we construct a model of household decision making in which agents consume a private and a public good interpreted as children s welfare children s utility depends on their human capital

the role of lawyer legislators in shaping the law evidence from voting on tort reforms abstractattorneys elected to the us congress and to state legislatures are systematically less likely to vote in favor of tort reforms that restrict tort litigation but more likely to support bills that extend tort law than are legislators with different professional backgrounds this finding is based on the analysis of 64 roll call votes at the federal and state levels between 1995 and 2014 it holds when controlling for legislators ideology and is particularly strong for term limited lawyer legislators the empirical regularity is consistent with the hypothesis that lawyer legislators at least in part pursue their private interests when voting on tort issues our results highlight the relevance of legislators identities and individual professional interests for economic policy making

marriage specialization and the gender division of labor we consider why the gender division of labor is so often enforced by custom and why customary gender divisions of labor generally involve both direction and prohibition in our formal model agents first learn skills and then enter the marriage market we show that wasteful behavior may emerge due to strategic incentives in specialization choice and human capital acquisition and that both problems may be mitigated through a customary gender division of labor this division is not pareto improving both the distributional effects and welfare gains of a customary gender division of labor decrease as opportunities for market exchange increase

long run effects and intergenerational transmission of natural disasters a case study on the 1970 ancash earthquake abstract this study estimates the effects of the 1970 ancash earthquake on human capital accumulation on the affected and subsequent generation 37 years after the shock using peruvian census of 1993 and 2007 the main finding is that males affected by the earthquake in utero completed on average 0 5 years less schooling while females affected by the earthquake completed 0 8 years less schooling moreover those affected by the earthquake also fare far worse in the marriage market and become parents at a much younger age in addition children of mothers affected at birth by the earthquake have 0 4 less years of education while those whose fathers were affected at birth show no effects other outcomes also suggest that welfare of the affected individuals has been negatively impacted in the long run this research supports previous literature on shocks in early childhood providing evidence of the existence of intergenerational transmission of shocks

marriage squeeze marriage age and the household savings rate in china abstract recent influential papers claim that single men s saving competition for marriage intensified by an increase in the male to female ratio in the pre marital cohort explains 60 percent of the rise of china s aggregate household savings rate in this paper we analyze whether the marriage competition remains a first order effect on saving when another margin of adjustment to sex ratio imbalance men s postponement of marriage is considered we construct a theoretical and quantitative life cycle model with a frictionless marriage market where a single man s rank is determined by his wealth and age by calibration we find that with the option to postpone marriage the response of the aggregate savings rate to the rising sex ratio is dampened by 45 percent moreover the model generates an unusual downward sloping age savings rate profile with young households saving more than their middle aged counterparts as observed in the data

continuous time methods in finance a review and an assessment i survey and assess the development of continuous time methods in finance during the last 30 years the subperiod 1969 to 1980 saw a dizzying pace of development with seminal ideas in derivatives securities pricing term structure theory asset pricing and optimal consumption and portfolio choices during the period 1981 to 1999 the theory has been extended and modified to better explain empirical regularities in various subfields of finance this latter subperiod has seen significant progress in econometric theory computational and estimation methods to test and implement continuous time models capital market frictions and bargaining issues are being increasingly incorporated in continuous time theory the roots of modern continuous time methods in finance can be traced back to the seminal contributions of merton 1969 1971 1973b in the late 1960s and early 1970s merton 1969 pioneered the use of continuous time modeling in financial economics by formulating the intertemporal consumption and portfolio choice problem of an investor in a stochastic dynamic programming setting merton 1973b also showed how such a framework can be used to develop equilibrium asset pricing implications thereby significantly extending the asset pricing theory to richer dynamic settings and expanding the scope of applications of continuous time methods to study problems in financial economics 1 within a span of about 30 years from the publication of merton s inf luential papers continuous time methods have become an integral part of financial economics indeed in certain core areas in finance such as e g asset pricing derivatives valuation term structure theory and portfolio selection continuoustime methods have proved to be the most attractive way to conduct research and gain economic intuition the continuous time approach in these areas has produced models with a rich variety of testable implications the econometric theory for testing continuous time models has made rapid strides in the last decade and has thus kept pace with the impressive progress on the theoretical front one hopes that the actual empirical investigations and estimation using the new procedures will follow suit soon

truthtelling in matching markets we analyze a search and matching model with non transferable utility and asymmetric information randomly paired agents go through an evaluation phase at the end of which they discover each other s types and choose to match or not before deciding to enter this phase agents can communicate through cheap talk we provide conditions for this communication to be informative and we examine how it affects agents welfare we show that communication is pareto improving only when the matching is assortative in the absence of communication and left unchanged by information transmission

how does intergenerational investment respond to changes in the marriage market evidence from china abstract this paper examines how intergenerational investment responds to changes in the marriage market two major channels are modeled and empirically tested first expecting gender specific impacts on the future marriage market for their children parents adjustments in educational investment differ by the gender of children and second changes in marriage market conditions have contemporaneous impacts on intrahousehold bargaining because they change existing couples remarriage options which affects their educational investment in their children we test our model by exploiting a policy change in favor of local urban men in the urban marriage market in china we find that educational investment by local local couples decreases for sons but changes little for daughters consistent with the decrease in children s educational investment female favored consumption decreases while male favored consumption increases these results provide evidence of interaction between the intrahousehold bargaining and the future marriage prospect effects

no toilet no bride intrahousehold bargaining in male skewed marriage markets in india abstract haryana state in india is characterized by widespread discrimination against women including a severe population level sex imbalance in this context an innovative social marketing campaign which targeted pro sanitation messages to households active in local marriage markets was implemented with the goal of increasing toilet ownership this paper estimates the impact of this program known colloquially as no toilet no bride on household level latrine ownership private sanitation coverage in haryana increased by 21 specifically among households with boys active on the marriage market this effect is larger and concentrated in marriage markets where women are relatively scarce and absent when women are relatively abundant which together suggest the program operated by successfully linking sanitation outcomes with marriage market competition induced by local scarcities of women due to male biased sex ratios

on the emergence of toyboys the timing of marriage with aging and uncertain careers we explore how gender bias in career opportunities affects matching in a marriage market with search frictions and where an individual s fitness decays with age we document a being left on the shelf effect where young singles who find the marriage market rapidly thins with age rush into early partnership singles with stronger career opportunities however have a greater option value to defer marriage more equal career opportunities for women captured by greater schooling and better occupations potentially explain the recent emergence of toyboy unions in which the woman is at least 5 years older than her partner 2011 by the economics department of the university of pennsylvania and the osaka university institute of social and economic research association

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

testable implications of transferable utility although the transferable utility tu assumption is widely used in micro theory little is known about its testable consequences and in particular how one can from the observation of a group s demand test whether the tu assumption is satisfied within this group we derive a set of necessary and sufficient conditions on demand that characterize the tu context the conditions are of two types first tu requires the group to behave as a single decision maker secondly within the unitary setting the representative utility generated by a tu framework must be of the generalized quasi linear gql form we derive testable properties of the demand function that fully characterize gql utilities these additional restrictions only involve specifi cp rices namely those of the goods that are publicly consumed within the household

static and intertemporal household decisions we discuss the most popular static and dynamic models of household behavior our main objective is to explain which aspects of household decisions different models can account for using this insight we describe testable implications identification results and estimation findings obtained in the literature particular attention is given to the ability of different models to answer various types of policy questions

term structure movements and pricing interest rate contingent claims this paper derives an arbitrage free interest rate movements model ar model this model takes the complete term structure as given and derives the subsequent stochastic movement of the term structure such that the movement is arbitrage free we then show that the ar model can be used to price interest rate contingent claims relative to the observed complete term structure of interest rates this paper also studies the behavior and the economics of the model our approach can be used to price a broad range of interest rate contingent claims including bond options and callable bonds

the dynamics of marriage and divorce we formulate and estimate a dynamic model of marriage divorce and remarriage using panel data on two cohorts of danish men and women the marital surplus is identified from the probability of divorce and the surplus shares of husbands and wives from their willingness to enter marriage we find that the educations of husbands and wives are complements education raises the share of the marital surplus for men but not for women as men and women get older husbands receive a larger share of the marital surplus the estimated costs of divorce are high both early and late in marriage

fatter attraction anthropometric and socioeconomic matching on the marriage market we construct a marriage market model of matching along multiple dimensions some of which are unobservable in which individual preferences can be summarized by a one dimensional index combining the various characteristics we show that under testable assumptions these indices are ordinally identified and that the male and female trade offs between their partners characteristics are overidentified using psid data on married couples we recover the marginal rates of substitution between body mass index bmi and wages or education men may compensate 1 3 additional units of bmi with a 1 percent increase in wages whereas women may compensate two bmi units with 1 year of education

the pricing of options on default free bonds recent developments in the finance literature dealing with the valuation of contingent claims have been triggered by black and scholes 2 with their valuation of european options on corporate stocks the type of valuation model derived by black and scholes is attractive because it is independent of preferences this independence is possible due to the fact that the contingent claims are usually assumed to be contingent on traded assets or traded state variables for example a european call option is a claim contingent on the value of the corresponding stock to maintain the independence of the claim from preferences however some variables have to be discarded and considered as constants for example the rate of interest which is not a traded state variable is considered a constant in most of the literature see black and scholes 2 merton 11 and ingersoll 9 though this approximation might not cause important discrepancies in the case of corporate liabilities and options on corporate liabilities the effect of such an approximation on the value of default free bonds and options on default free bonds is more important since these liabilities depend only on the rate of interest

competing premarital investments this paper studies premarital parental investments in children s wealth where spousal wealth is a public good in marriage by investing in their children s wealth parents increase the wealth of their children and the quality of the spouses that their children can marry in large marriage markets the hedonic return to investment internalizes all the external benefits of premarital investment in wealth so that the competitive equilibrium is efficient marriage market competition also increases investments in small marriage markets relative to no competition but equilibrium investments are not efficient

why are the returns to schooling higher for women than for men many studies have found that the impact of schooling on earnings is greater for females than for males despite the fact that females tend to earn less both absolutely and controlling for personal characteristics this study investigates possible reasons for this effect using data from the national longitudinal survey of youth 1979 one explanation is that education appears to have a double effect on the earnings of women it increases their skills and productivity as it does with men and in addition it appears to reduce the gap in male and female earnings attributable to factors such as discrimination tastes and circumstances the latter appear to account for about half of the differential in the returns to schooling

the political economy of product liability reform the present body of product liability rules has been fashioned by common law judges with an occasional assist from legislatures the key premise of the present system is that freedom of contact even subject to the usual caveats of force and misrepresentation has no place to play within the product liability system that assumption makes good sense in the few cases in which defective products are responsible for injuries to bystanders but it is far more dubious when suits are brought by injured product purchasers or users to be sure there is typically no direct contract link between the manufacturer and ultimate purchaser the absence of explicit contracts however is itself a reflection of the present body of legal rules that regulate product use these rules refuse to enforce a limitation on liability or damages created by contract and occasionally impose punitive damages on firms bold enough to seek contractual protection if the law were otherwise then a manufacturer could and would designate a retailer as his agent so as to secure a direct contract with a purchaser and where possible a product user contractual quiescence today is not a sign of satisfaction with the legal rules as ideal default provisions nor is it evidence that transactions costs are so high that voluntary agreements cannot be formed it is only proof that any effort to contract out of the present tort system has been effectively blocked by the judges and legislatures who have created the modern law the present regime of legal rules has powerful social consequences the conventional economic assumption is that rational self interested parties only enter into contracts that ex ante assure them of some joint gain by that standard the present system of public regulation of contract terms whether by common law decisions or statute imposes significant losses on both sides legislation to remore these barriers to private contract could generate some substantial overall gains whenever legislation could generate some allocative improvement it should be possible to divide the gains thereby generated to leave all interested parties better off than before if the costs of passing legislation and dividing the gains were zero then inefficient substantive rules would never remain on the public books today s product liability rules do not fade but grow stronger with each passing year the remainder of this paper helps to explain why this trend is likely to continue the barriers to needed legislative reforms are simply too great

investment in schooling and the marriage market we present a model in which investment in schooling generates two kinds of returns the labor market return resulting from higher wages and a marriagemarket return defined as the impact of schooling on the marital surplus share one can extract men and women may have different incentives to invest in schooling because of different market wages or household roles this asymmetry can yield a mixed equilibrium with some educated individuals marrying uneducated spouses when the labor market returns to schooling rises home production demands less time and the traditional spousal labor division norms weaken more women may invest in schooling than men

changing the rules midway the impact of granting alimony rights on existing and newly formed partnerships this article analyses the effect of a reform granting alimony rights to cohabiting couples in canada a collective household model with a matching framework predicts that changes in alimony laws would affect existing couples and couples to be differently for existing couples it benefits the intended beneficiary but for couples not yet formed it generates offsetting intra household transfers and lower intra marital allocations for the beneficiary our empirical analyses confirm these predictions among couples united before the reform obtaining the right to petition for alimony led women to lower their labour force participation but not among newly formed cohabiting couples

women s liberation what s in it for men the nineteenth century witnessed dramatic improvements in the legal rights of married women given that these changes took place long before women gained the right to vote they amounted to a voluntary renouncement of power by men in this paper we investigate men s incentives for sharing power with women in our model women s legal rights set the marital bargaining power of husbands and wives we show that men face a tradeoff between the rights they want for their own wives namely none and the rights of other women in the economy men prefer other men s wives to have rights because men care about their own daughters and because an expansion of women s rights increases educational investments in children we show that men may agree to relinquish some of their power once technological change increases the importance of human capital we corroborate our argument with historical evidence on the expansion of women s rights in england and the united states

a theory of the competitive saving motive abstract motivated by recent empirical work this paper formalizes a theory of competitive savings an arms race in household savings for mating competition that is made more fierce by an increase in the male to female ratio in the pre marital cohort relative to the empirical work the theory can clarify a number of important questions what determines the strength of the savings response by males or households with a son can women or households with a daughter dis save what are the conditions under which aggregate savings would go up in response to a higher sex ratio this theory can potentially help to understand the savings patterns in china india vietnam singapore hong kong and other economies that have experienced a dramatic increase in the pre marital sex ratio

court politics the political economy of tort awards abstract we investigate the forces that explain why trial awards differ across the united states in 23 states judges are elected and in 10 they are elected via partisan elections elections have two important effects first defendants are often out of state nonvoters while plaintiffs are typically in state voters we predict therefore that elected judges will redistribute wealth from out of state businesses to in state plaintiffs second the realities of campaign financing require judges to seek and accept campaign funding from trial lawyers who uniformly are interested in larger awards we hypothesize that these two forces cause awards to be larger in states where the judiciary is elected rather than appointed we also hypothesize that the demand for redistribution will increase as poverty increases and thus that awards will be larger in states with greater poverty using a sample of over 7 000 cases across 48 of the 50 states we find significant evidence in support of these hypotheses

expected interruptions in labor force participation and sex related differences in earnings growth the paper analyzes the joint determination of wives earnings and labor force participation over the life cycle given the interruptions in wives work careers the interruptions affect the profitability of the investment in human capital which in turn determines earnings the earnings prospects feed back into the participation decision namely the decision whether and for how long to drop out of the labor force the formal analysis compares the age earnings profiles of persons who drop out of the labor force with those who do not during the pre and post interruption period the comparison is carried out where interruptions are assumed to be exogenous and when they are endogenous the effect of productivity at home the initial stock of human capital and its rental value on the length of the interruption is investigated this abstract was borrowed from another version of this item

dynamic asset allocation in a mean variance framework the aim of this article is to analyze the portfolio strategies that are mean variance efficient when continuous rebalancing is allowed between the current date 0 and the horizon t under very general assumptions when a zero coupon bond of maturity t exists the dynamic efficient frontier is a straight line the slope of which is explicitly characterized every dynamic mean variance efficient strategy can be viewed as buy and hold combinations of two funds the zero coupon bond of maturity t and a continuously rebalanced portfolio an appropriate dynamic strategy defining the latter is explicitly derived for two particular price processes and comparisons of the efficient frontiers static versus dynamic are provided in these cases

it s raining men hallelujah the long run consequences of male biased sex ratios we document the short and long run effects of male biased sex ratios we exploit a natural historical experiment where large numbers of male convicts and far fewer female convicts were sent to australia in the 18th and 19th centuries in areas with more male biased sex ratios women were historically more likely to get married and less likely to work outside the home in these areas today both men and women continue to have more conservative attitudes towards women working and women work fewer hours outside the home while these women enjoy more leisure they are also less likely to work in high ranking occupations we demonstrate that the consequences of uneven sex ratios on cultural attitudes labour supply decisions and occupational choices can persist in the long run well after sex ratios are back to the natural rate we document the roles of vertical cultural transmission and marriage homogamy in sustaining this cultural persistence

the phantom gender difference in the college wage premium abstract a growing literature seeks to explain why so many more women than men now attend college a commonly cited stylized fact is that the college wage premium is and has been higher for women than for men after identifying and correcting a bias in estimates of college wage premiums i find that there has been essentially no gender difference in the college wage premium for at least a decade a similar pattern appears in quantile wage regressions and for advanced degree wage premiums

a coordination model of the sexual division of labor abstract the difference of natural talents in different men is in reality much less than we are aware of and the very different genius which appears to distinguish men of different professions when grown up to maturity is not upon occasions so much the cause as the effect of the division of labor adam smith 1976 the wealth of nations the sexual division of labor is a ubiquitous feature of human society this paper presents a model demonstrating that the sexual division of labor can be explained by the incentive to coordinate human capital investments among males and females seeking to enter the marriage market and make compatible matches the model assumes no inherent biological differences between men and women in productive abilities but rather demonstrates that differences between men and women may be a consequence of economic incentives in an economy based on household production the model also provides a possible explanation for how ideological beliefs about gender differences may develop and persist

accounting for age in marital search decisions spouse quality measured by educational attainment varies significantly with the age at which an individual marries peaking in the mid twenties then declining through the early forties interestingly this decline is much sharper for women than men meaning women increasingly marry less educated men as they age moreover quality has worsened for educated women over several decades while it has improved for men using a non stationary sequential search model we identify and quantify the search frictions that generate these age dependent marriage outcomes we find that single life utility is typically the dominant friction though college women in the 1950 and 1970 cohorts are affected even more by deteriorating suitor quality regardless of educational status individual choice as opposed to pure luck is pivotal in explaining marriage market outcomes earlier in life

investment and competitive matching we study markets in which agents first make investments and are then matched into potentially productive partnerships equilibrium investments and the equilibrium matching will be efficient if agents can simultaneously negotiate investments and matches but we focus on markets in which agents must first sink their investments before matching additional equilibria may arise in this sunk investment setting even though our matching market is competitive these equilibria exhibit inefficiencies that we can interpret as coordination failures all allocations satisfying a constrained efficiency property are equilibria and the converse holds if preferences satisfy a separability condition we identify sufficient conditions most notably quasiconcave utilities for the investments of matched agents to satisfy an exchange efficiency property as well as sufficient conditions most notably a single crossing property for agents to be matched positive assortatively with these conditions then forming the core of sufficient conditions for the efficiency of equilibrium allocations

women s college decisions how much does marriage matter this article investigates the sequential college attendance decision of young women and quantifies the effect of marriage expectations on their decision to attend and graduate from college a dynamic choice model of college attendance labor supply and marriage is formulated and structurally estimated using panel data from the nlsy79 the model is used to simulate the effects of no marriage benefits and finds that the predicted college enrollment rate will drop from 58 0 to 50 5 using the estimated model the college attendance behavior for a younger cohort from the nlsy97 is predicted and used to validate the behavioral model

cross border marriage costs and marriage behavior theory and evidence this article analyzes cross border marriages between mainland china and hong kong hk we examine the effects of a reduction in cross border marriage costs following an increase in marriage migration quotas and the handover of hk to china we find that cross border marriages mainly involve men from the low tail of the hk attribute distribution we also find that hk women s position in the marriage market and within households deteriorated following the reduction in cross border marriage costs and that their disadvantaged position exerts an incentive effect on their labor market behavior these outcomes are consistent with our matching model

education matching and the allocative value of romance societies are characterized by customs governing the allocation of non market goods such as marital partnerships we explore how such customs affect the educational investment decisions of young singles and the subsequent joint labour supply decisions of partnered couples we consider two separate matching paradigms for agents with heterogeneous abilities one where partners marry for money and the other where partners marry for romantic reasons orthogonal to productivity or debt these generate different investment incentives and therefore have a real impact on the market economy while marrying for money generates greater investment efficiency romantic matching generates greater allocative efficiency since more high ability individuals participate in the labour market the analysis offers the possibility of explaining cross country differences in educational investments and labour force participation based on matching regimes

an exact bond option formula this paper derives a closed form solution for european options on pure discount bonds assuming a mean reverting gaussian interest rate model as in vasicek 8 the formula is extended to european options on discount bond portfolios

on the regional labour market determinants of female university enrolment in europe casarico a profeta p and pronzato c d on the regional labour market determinants of female university enrolment in europe regional studies this paper empirically investigates how young women s decisions of investing in post secondary education are affected by labour market outcomes of older women living in the same region eu silc data on educational decisions of women who completed secondary schooling are used and indicators of the regional labour market are constructed exploiting regional and time variability it is found that the share of working women with young children of women with managerial positions and the self employed positively affect the probability to enrol significant effects of these variables for men are not found

marriage labor supply and home production we extend the search matching model of the marriage market of shimer and smith 2000 to allow for labor supply home production match specific shocks and endogenous divorce we study nonparametric identification using panel data on marital status education family values wages and market and non market hours and we develop a semiparametric estimator we estimate how much sorting results from time use specialization or homophilic preferences we estimate how equilibrium marriage formation affects the wage elasticities of market and non market hours we estimate individuals willingness to pay for marriage and quantify the redistributive effect of intra household resource sharing

labor market search and schooling investment we generalize a search matching and bargaining model to allow individuals to acquire productivity enhancing schooling prior to labor market entry in general search frictions and weakness in bargaining position contribute to underinvestment in schooling from an efficiency perspective using estimates of a general equilibrium version of the model in which firm vacancy creation decisions are included we find that minimum wages and schooling subsidies improve aggregate welfare but have very different welfare impacts across the ability distribution in particular policies that maximize the average welfare of workers have strongly negative effects on the welfare of the least able

the valuation of options on coupon bonds abstract we derive simple closed form expressions for european options on coupon bonds using the general equilibrium term structure framework of cox ingersoll and ross the properties of these options are very different from those implied by the black scholes model for example bond call and put values can move in the same direction as the value of the underlying bond changes this has important implications for hedging interest rate risk with bond options furthermore bond option values can be decreasing functions of interest rate volatility as well as their time to expiration we also examine the properties of american bond options

the economics of options implied inflation probability density functions recently a market in options based on cpi in ation in ation caps and oors has emerged in the us this paper uses quotes on these derivatives to construct probability densities for in ation we study how these pdfs respond to news announcements and nd that the implied odds of de ation are sensitive to certain macroeconomic news releases we compare the option implied probability densities with those obtained by time series methods and use this information to construct empirical pricing kernels the options implied densities assign considerably more mass to extreme in ation outcomes either de ation or high in ation than do their time series counterparts this yields a u shaped empirical pricing kernel with investors having high marginal utility in states of the world characterized by either de ation or high in ation

marriage as a rat race noisy premarital investments with assortative matching we study the efficiency of premarital investments when parents care about their child s marriage prospects in a large frictionless marriage market with nontransferable utility stochastic returns to investment ensure that equilibrium is unique we find that generically investments exceed the pareto efficient level unless the sexes are symmetric in all respects girls will invest more than boys if their quality shocks are less variable than shocks for boys or if they are the abundant sex the unique equilibrium in our continuum agent model is the limit of the equilibria of finite models as the number of agents tends to infinity

female labour supply human capital and welfare reform we estimate a dynamic model of employment human capital accumulation including education and savings for women in the united kingdom exploiting tax and benefit reforms and use it to analyze the effects of welfare policy we find substantial elasticities for labor supply and particularly for lone mothers returns to experience which are important in determining the longer term effects of policy increase with education but experience mainly accumulates when in full time employment tax credits are welfare improving in the u k increase lone mother labor supply and marginally reduce educational attainment but the employment effects do not extend beyond the period of eligibility marginal increases in tax credits improve welfare more than equally costly increases in income support or tax cuts

separate spheres bargaining and the marriage market this paper introduces the separate spheres bargaining model a new model of distribution within marriage it differs from divorce threat bargaining models e g manser brown mcelroy horney in that the threat point is not divorce but a noncooperative equilibrium within marriage this noncooperative equilibrium reflects traditional gender roles the predictions of our model thus differ from those of divorce threat bargaining models in the separate spheres model cash transfer payments to the mother and payments to the father can but need not imply different equilibrium distributions in existing marriages in the long run the distributional effects of transfer policies may be substantially altered by changes in the marriage market equilibrium

divorce remarriage and child support there is some evidence that children of divorced parents do not perform as well as comparable children in intact families but that this gap declines with the aggregate divorce rate we develop a model in which the higher expectations for remarriage associated with higher divorce rates can trigger an equilibrium in which divorced fathers make more generous transfers that benefit their children and the mother in the aftermath of divorce as a result the welfare loss of children from the separation of their parents can be lower when divorce and remarriage rates rise

priceless the nonpecuniary benefits of schooling copyright 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 by the american economic association permission to make digital or hard copies of part or all of american economic association publications for personal or classroom use is granted without fee provided that copies are not distributed for profit or direct commercial advantage and that copies show this notice on the first page or initial screen of a display along with the full citation including the name of the author copyrights for components of this work owned by others than aea must be honored abstracting with credit is permitted the author has the right to republish post on servers redistribute to lists and use any component of this work in other works for others to do so requires prior specific permission and or a fee permissions may be requested from the american economic association administrative office by going to the contact us form and choosing copyright permissions request from the menu copyright 2016 aea

gender based price discrimination in matching markets this paper develops a new model to analyze price discrimination in matching markets where agents have private information about their respective qualities on the basis of signals car clothing club membership etc purchased from profit maximizing firms men and women form beliefs about each other s qualities the matching must then be stable in the following sense there cannot be a man and woman who are unmatched and who both believe they would be better off if they were matched with one another the model enables an analysis of the impact of third degree or gender based price discrimination on welfare when third degree price discrimination is not feasible the cost of eliciting private information is higher but a monopoly intermediary may have stronger incentives to implement an efficient allocation i show that gender based price discrimination is more likely to have a positive impact the more symmetric the matching environment is

brides for sale cross border marriages and female immigration every year a large number of women immigrate as brides from developing countries to developed countries in east asia this phenomenon virtually did not exist in the early 1990s but foreign brides currently comprise 4 to 35 percent of newlyweds in these developed asian countries this paper argues that two factors account for this rapid increase in bride importation the rapid growth of women s educational attainment and a cultural norm that leads to a low net surplus of marriage for educated women we provide empirical evidence supporting our theoretical model and its implications using datasets from japan korea singapore and taiwan

educational homogamy how much is opportunities individuals match on length and type of education we find that around half of the systematic sorting on education is explained by the tendency of individuals to marry someone who went to the same educational institution or to an institution near them this may be due to low search frictions or selection of people with the same preferences into the same institutions the residual half of the systematic sorting on education is a direct effect of partners education which is potentially explained by complementarities in household production in couples with same education