For Better or For Worse? State-Level Marital Formation and Risk Sharing

Authors

Ralph Chami
Gregory Hess, Claremont McKenna CollegeFollow

Document Type

Article

Department

Economics (CMC)

Publication Date

2005

Abstract

Why do some U.S. states have higher levels of marital formation than others? This paper introduces an economic model wherein a state’s representative individual may choose to marry in order to diversify his or her idiosyncratic income risk. The paper demonstrates that such a diversification motive is enhanced for some utility functions when a state’s level of undiversifiable risk becomes larger, and when a state’s initial income is lower. A test of the model’s predictions, using cross-sectional data for the 50 U.S. states, provides some suggestive evidence for a risk sharing motive in marriage formation and joint spouse labor participation.

Rights Information

© 2005 Springer-Verlag

Terms of Use & License Information

Terms of Use for work posted in Scholarship@Claremont.

DOI

10.1007/s11150-005-4940-2

Recommended Citation

Chami, Ralph and Gregory Hess. "For Better or For Worse? State-Level Marital Formation and Risk Sharing." Review of Economics of the Household 3.4 (2005): 367-385. DOI: 10.1007/s11150-005-4940-2