The Marriage Motive: A Price Theory of Marriage: How Marriage Markets Affect Employment, Consumption, and Savings

208 Pages·2015·2.63 MB·English

by  Shoshana Grossbard (auth.)

The Marriage Motive: A Price Theory of Marriage
Shoshana Grossbard
The Marriage Motive:
A Price Theory of Marriage
How Marriage Markets Affect Employment,
Consumption, and Savings
1 3
Shoshana Grossbard
San Diego
California
USA
ISBN 978-1-4614-1622-7 ISBN 978-1-4614-1623-4 (eBook)
DOI 10.1007/978-1-4614-1623-4
Springer New York Heidelberg Dordrecht London
Library of Congress Control Number: 2014955578
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This book is dedicated to Gary Becker, my
mentor, who unexpectedly died while I was
writing this book.
Acknowledgments
I am grateful to all those who helped me with this book: the extraordinary econom-
ics teachers who inspired me early on and helped me develop my ideas on marriage:
Gary Becker, Milton Friedman, Jacob Mincer, H. Gregg Lewis, Edward Lazear,
James Heckman, and T.W. Schultz; Ronald Cohen, the anthropologist who served
in my dissertation committee and opened my eyes to the realities of marriage among
the Kanuris; my coauthors J. Ignacio Gimenez, Jose Alberto Molina, Alfredo M.
Pereira, and Victoria Vernon for allowing me to use materials that we wrote jointly;
earlier coauthors with whom I published articles mentioned in this book: Catalina
Amuedo-Dorantes, Shoshana Neuman, and Xuanning Fu; Joni Hersch and Victoria
Vernon for providing me with specific computations; Glenda Sachs Jaffe and Oana
Tocoian for helpful comments on most of the book; Marina Adshade, George Davis,
Leta Hong Fincher, Andrew Francis, Joni Hersch, Nacho Gimenez, Charles Horio-
ka, Bertrand Lemennicier, Jose Alberto Molina, Sonia Oreffice, Michal Shechtman,
and Elena Stancanelli for helpful comments on selected chapters; Hazem Alshai-
khmubarak for helpful research assistance; Lorraine Klimowich and Jon Gurstelle
at Springer for their encouragement and assistance; Brian Halm, Anoop Kumar,
and Puja Kumari at Springer for their help with copy editing and preparation for
production; and the Department of Economics and the College of Arts and Letters
at San Diego State University for supporting my research.
I also thank my children, Michal Hannah, Zev Mordechai, Chaim Yehoshua, and
Esther Chava, and the many generations of students who studied economics of mar-
riage with me at San Diego State University and elsewhere, for motivating me to
write this book. I hope my ideas will help them find success and happiness. Finally,
I thank my husband Robert Yaronne for his encouragement and support, for doing
much of the WiHo in our home while I was writing, and for his helpful comments
on the manuscript.
vii
Contents
1 Introduction ................................................................................................ 1
Part I A Model of Work-In-Household and Labor Supply with
Privately Consumed Household Goods
2 A Theory of Allocation of Time in Markets for Labor and
Marriage: Macromodel.............................................................................. 21
3 A Theory of Allocation of Time in Markets for Labor and
Marriage: Multiple Markets for Work-in-Household ............................ 33
Part II Labor Supply and Other Time Uses
4 How Marriage Markets Affect Allocation
and Valuation of Time Implications from a Macro Model ..................... 41
5 Compensating Differentials in Marriage Markets and more
New Implications for Labor Supply Based on a Marshallian
Marriage Market Analysis ........................................................................ 57
6 Revisiting Labor Supply Effects of Sex Ratio, Income, and
Wage. Effects of Marriage-Related Laws ................................................ 71
7 Labor Supply, Household Production, and Common Law
Marriage Legislation ................................................................................. 89
8 Labor Supply and Marriage Markets: A Simple Graphic
Analysis with Household Public Goods.................................................... 115
9 Household Production and Racial Intermarriage................................... 123
ix
x Contents
Part III Consumption and Savings
10 A Consumption Theory with Competitive Markets for
Work-in-Household .................................................................................. 167
11 Savings, Marriage, and Work-in-Household ......................................... 191
Chapter 1
Introduction
Introduction
Price theory is a founding block of economic theory, especially according to the
Chicago school of economics in which I was trained. In this book, price theory is
used to analyze how economic outcomes—employment, other time uses, consump-
tion, and savings—are related to marriage markets. Marriage is defined as a couple
with at least one person who engages in household production. Couples could
cohabit without being married. Unless otherwise assumed, couples could differ in
their sexual orientation.
Marriage Markets and a Price Mechanism:
A Chicago Approach
My approach is Chicagoan in two ways. First, it heavily relies on price theory.
According to Milton Friedman (1976), winner of the 1976 Nobel prize in econom-
ics, there are only two organizing principles for organizing an economy: the market
principle and the command principle. The market principle needs prices to operate;
hence the central importance of prices and price theory.
Second, my approach is Chicagoan as it was influenced by Gary Becker’s
expansionist view of economics. Becker started the New Home Economics (NHE)
with Jacob Mincer while they both taught at Columbia University in the 1960s
(see Becker 1960, 1965; Mincer 1962, 1963). Some call the NHE the Chicago–Co-
lumbia approach to household economics.1 According to the NHE, marriages are
1 Becker studied at Chicago and taught there most of his life (before and after moving to Colum-
bia). Mincer received the postdoctoral degree at Chicago and was a Visiting Professor there in the
1970s.
© Springer Science+Business Media New York 2015 1
S. Grossbard, The Marriage Motive: A Price Theory of Marriage,
DOI 10.1007/978-1-4614-1623-4_1
2 1 Introduction
nonprofit firms that organize household production. Becker published his theory of
allocation of time while still at Columbia and his economic theory of marriage soon
after moving to Chicago in 1969.
How do marriages organize production and distribution? What explains alloca-
tion of individual men and women into marriages? Friedman had an unambiguous
answer to the first question. As stated in his textbook, Price Theory, “The principle
of organization operating in the household is similar to that employed in a col-
lectivistic society—central authority. The major difference is that participation in
the household is voluntary for adults. But even this difference does not exist for
children.” (Friedman 1976, p. 4). Since Friedman’s textbook first appeared, in 1962,
USA and other Western countries underwent fundamental changes. How often do
Westerners think of surrendering to a central authority when marrying in the second
decade of the twenty-first century? If Friedman is right and there are only two ways
of organizing production—market or command—and we limit the role of the com-
mand principle, then we have to give more room to the market principle.
This book examines how competitive marriage markets and implicit or explicit
price mechanisms possibly affect (1) matters of production, allocation, and distri-
bution related to marriage, and (2) economic behavior—related to employment,
consumption, and savings—that responds to such prices.
Explicit prices related to marriage go back to ancient times. Jacob had to pay
Laban for Rachel and Leah according to Genesis. What Jacob and other men from
times immemorial have paid for a bride is now called a bride-price. Sometimes the
money goes in the other direction and women or their parents pay a dowry prior to
marriage. Dowries and bride-prices can still be found in many parts of the world,
and their coexistence in India led Martin Bronfenbrenner (1971) to write the first
economic analysis of marriage.2 Soon after, Becker (1973) published the first price
theory of marriage, introducing competitive marriage markets with implicit prices.
Consequently, price theory of marriage is applicable anywhere, even when there are
no explicit prices for brides, grooms, or the work they do for each other.
The Impact of Gary Becker, Pioneer in the Economics
of Marriage
Gary Becker’s theories of the family were singled out as one of the reasons why he
was awarded the Nobel Prize in economics in 1992. He passed away in May 2014
but his ideas live on. This book is heavily influenced by Becker’s price theory of
marriage, a theory that consists of two separate models: a macro and a micro de-
mand and supply model. Both involve market equilibria, implying optimal implicit
prices and quantities as well as allocative efficiency. Becker (1973) emphasizes
how these models can also help to analyze intramarriage distribution problems by
2 Bronfenbrenner had received the PhD degree in economics at Chicago in 1939.