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on Demographic Economics |
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Issue of 2017‒12‒03
ten papers chosen by Héctor Pifarré i Arolas Max-Planck-Institut für demografische Forschung |
| By: | Barigozzi, Francesca; Cremer, Helmuth; Roeder, Kerstin |
| Abstract: | The tax regimes applied to couples in many countries including the US, France, and Germany imply either a marriage penalty or a marriage bonus. We study how they affect the decision to get married by considering two potential spouses who play a marriage proposal game. At the end of the game they may get married, live together without formal marriage, or split up. In this signaling game, proposing (or getting married) is costly but can indicate strong love. The striking property we obtain is that a marriage bonus may actually reduce the probability that a couple gets married. If the bonus is sufficiently large, the signaling mechanism breaks down, and only a pooling equilibrium in which fewer couples get married remains. Similarly, a marriage penalty may increase the marriage probability. Specifically, the penalty may lead to a separating equilibrium with efficiency enhancing information transmission, which was otherwise not possible. Our results also imply that marriage decisions in the laissez-faire are not necessarily privately optimal. In some cases a bonus or a penalty may effectively make the marriage decision more efficient; it may increase the number of efficient marriages that otherwise may not be concluded. |
| Keywords: | marriage bonus; marriage penalty; proposal game; signaling |
| JEL: | D82 H31 J12 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12396&r=dem |
| By: | Julia Bredtmann; Christina Vonnahme |
| Abstract: | The 2008 alimony reform in Germany considerably reduced post-marital and caregiver alimony. We analyze how individuals adapted to these changed rulings in terms of labor supply, the intra-household allocation of leisure, and marital stability. We use the German Socio-Economic Panel (SOEP) and conduct a difference-in-difference analysis to investigate couples’ behavioral responses to the reform. The results do not confirm theoretical expectations from labor supply and household bargaining models. In particular, we do not find evidence that women increase their labor supply as a result of the negative expected income effect. Neither do our results reveal that leisure is shifted from women to men as a response to the changed bargaining positions. In contrast, we find evidence that the reform has led to an increase in the probability to separate for married as opposed to non-married cohabiting couples. |
| Keywords: | Alimony, marital instability, female labor supply, intra-household bargaining |
| JEL: | J12 J13 J22 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwsop:diw_sp942&r=dem |
| By: | Margherita Borella; Mariacristina De Nardi; Fang Yang |
| Abstract: | In the U.S., both taxes and old age Social Security benefits explicitly depend on one's marital status. We study the effects of eliminating these marriage-related provisions on the labor supply and savings of two different cohorts. To do so, we estimate a rich life-cycle model of couples and singles using the Method of Simulated Moments (MSM) on the 1945 and 1955 birth-year cohorts. Our model matches well the life cycle profiles of labor market participation, hours, and savings for married and single people and generates plausible elasticities of labor supply. We find that these marriage-related provisions reduce the participation of married women over their life cycle, the participation of married men after age 55, and the savings of couples. These effects are large for both the 1945 and 1955 cohorts, even though the latter had much higher labor market participation of married women to start with. |
| JEL: | E21 H3 H31 |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:23972&r=dem |
| By: | Robert A. Pollak |
| Abstract: | This paper investigates marriage market equilibrium under the assumption that Bargaining In Marriage (BIM) determines allocation within marriage. Prospective spouses, when they meet in the marriage market, are assumed to foresee the outcome of BIM and rank prospective spouses on the basis of the utilities they foresee emerging from BIM. Under these assumptions, the marriage market is the first stage of a multi-stage game – in the simplest case, a two-stage game – that must be solved by backwards induction. The marriage market determines both who marries and, among those who marry, who marries whom. Bargaining in the second and any subsequent stages determines allocation within each marriage. When BIM determines allocation within marriage, the appropriate framework for analyzing marriage market equilibrium is the Gale-Shapley matching model. In contrast, the standard model of marriage market equilibrium assumes that prospective spouses make Binding Agreements in the Marriage Market (BAMM) that determine allocation within marriage. If we assume BAMM and transferable utility, then the appropriate framework for analyzing marriage market equilibrium is the Koopmans-Beckmann-Shapley-Shubik assignment model. BIM and BAMM have different implications not only for allocation within marriage but also for who marries, who marries whom, the number of marriages, and the Pareto efficiency of marriage market equilibrium. |
| JEL: | D1 J12 K36 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:24000&r=dem |
| By: | Laurens Cherchye; Sam Cosaert; Thomas Demuynck; Bram De Rock |
| Abstract: | We propose a novel approach to model joint consumption decisions of individuals who care for each other. We assume noncooperative interaction between the different individuals and the within-group consumption outcome critically depends on the degree of caring between the group members. By varying the degree of caring, the model encompasses a whole continuum of group consumption models that are situated between the fully cooperative model (assuming a Pareto optimal outcome) and the noncooperative model without caring (assuming a public good game with voluntary contributions). This feature is used to define a measure for the degree of cooperation within the group, which quantifies how close the observed group behavior is to the fully cooperative benchmark. We also establish a dual characterization of our noncooperative model with caring preferences: we show that the model is dually equivalent to a noncooperative model with non-caring preferences that is characterized by intra-group transfers. Following a revealed preference approach, we derive testable implications of the model for empirical data. Finally, we also use our model to analyze decisions made by dyads of children in an experimental setting. We find considerable heterogeneity in the degree of caring (or cooperation) across dyads, which correlates with assertiveness and the degree of interaction within dyads. |
| JEL: | D11 D12 D13 C14 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/261074&r=dem |
| By: | Laurens Cherchye; Sam Cosaert; Bram De Rock; Pieter Jan Kerstens; Frederic Vermeulen |
| Abstract: | We propose novel tools for the analysis of individual welfare on the basis of aggregate household demand behavior. The method assumes a collective model of household consumption with the public and private nature of goods specified by the empirical analyst. A main distinguishing feature of our method is that it builds on a revealed preference characterization of the collective model that is intrinsically nonparametric. We show how to identify individual money metric welfare indices from observed household demand, along with the intrahousehold sharing rule and the individuals' willingness-to-pay for public consumption (i.e. Lindahl prices). The method is easy to use in practice and yields informative empirical results, which we demonstrate through a simulation analysis and an empirical application to labor supply data. |
| Keywords: | individual welfare; collective model; revealed preferences; sharing rule; money metric welfare index; identification; labor supply |
| JEL: | D11 D12 D13 C14 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/261073&r=dem |
| By: | Houseworth, Christina; Fisher, Jonathan |
| Abstract: | Abstract. We utilize over 30 years of the Current Population Survey to examine labor force participation and wage patterns among five cohorts of white and black women. By estimating wages using four selection correction techniques in determining the wage gap for women who are not in the labor force, we provide evidence of the changing role of selection among women over time. We find an increasing observed wage gap between white and black women for younger cohorts; however, the decline in selection for both black and white women does not explain the rising wage gap. |
| Keywords: | wages, wage gap, race, labor force, inequality |
| JEL: | J0 J21 J31 |
| Date: | 2017 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:81884&r=dem |
| By: | Clément Bosquet; Pierre-Philippe Combes; Cecilia García-Peñalosa |
| Abstract: | The promotion system for French academic economists provides an interesting environment to examine the promotion gap between men and women. Promotions occur through national competitions for which we have information both on candidates and on those eligible to be candidates. We can then examine the two stages of the process: application and success. Women are less likely to seek promotion and this accounts for up to 76% of the promotion gap. Being a woman also reduces the probability of promotion conditional on applying, although the gender difference is not statistically significant. Our results highlight the importance of the decision to apply. |
| Keywords: | gender gaps, promotions, academic labour markets |
| JEL: | J16 J7 I23 |
| Date: | 2017–11 |
| URL: | http://d.repec.org/n?u=RePEc:cep:cepdps:dp1511&r=dem |
| By: | Attanasi, Giuseppe; Dessí, Roberta; Moisan, Frederic; Robertson, Donald |
| Abstract: | Intergenerational interactions play an important part in society with older generations often acting as role models that influence younger ones. We investigate in a public good experiment how the behavior of more experienced and knowledgeable players (graduate students) is affected when they are informed that some of their personal and behavioral characteristics will be transmitted to future first-year undergraduates (enrolling the following year) playing the same game at the same university. In the "information" treatment, the history of behavior is transmitted with some personal characteristics (e.g. age and gender). In the "photo" treatment, a photo is also transmitted. Despite the absence of any monetary linkage between generations, our results show a significant effect of visibility by the future audience on initial contributions and dynamic behavior. Contrary to previous findings in the literature, contributions are lower in the presence of such personal identification. We explain this surprising negative effect by a "sucker aversion" bias according to which people become more sensitive to being perceived as exploited by their peers. We argue that the nature of the "audience" matters in reaching such an undesirable outcome. |
| Date: | 2017–10 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:12413&r=dem |
| By: | Mester, Loretta J. (Federal Reserve Bank of Cleveland) |
| Abstract: | As the economy has moved from financial crisis and the Great Recession to sustainable expansion, attention has shifted from cyclical aspects of the economy to structural factors. As policy has begun to normalize, the question has been raised: “what is normal?” To answer such a question, we need to understand how the underlying fundamentals of the economy are evolving. A critical factor is demographics. Demographic change can influence the underlying growth rate of the economy, structural productivity growth, living standards, savings rates, consumption, and investment; it can influence the long-run unemployment rate and equilibrium interest rate, housing market trends, and the demand for financial assets. Moreover, differences in demographic trends across countries can be expected to influence current account balances and exchange rates. So to understand the global economy, it helps to understand changing demographics and the challenges they pose for monetary and fiscal policymakers. |
| Keywords: | demographics; labor markets; fiscal policy; monetary policy; |
| Date: | 2017–11–16 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedcsp:88&r=dem |