NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Efficiency in Marriage

Shelly Lundberg, Robert A. Pollak

NBER Working Paper No. 8642
Issued in December 2001
NBER Program(s):   LS

Economists usually assume that bargaining in marriage leads to efficient outcomes. The most convincing rationale for this assumption is the belief that efficient allocations are likely to emerge from repeated interactions in stationary environments, and that marriage provides such an environment. This paper argues that when a current decision affects future bargaining power, inefficient outcomes are plausible. If the spouses could make binding commitments -- in effect, commitments to refrain from exploiting the future bargaining advantage -- then the inefficiency would disappear. But spouses seldom can make binding commitments regarding allocation within marriage. To investigate the efficiency of bargaining within marriage when choices affect future bargaining power, we consider the location decisions of two-earner couples. These location decisions are transparent and analytically tractable examples of choices likely to affect future bargaining power, but the logic of our analysis applies to many other decisions. For example, decisions about education, fertility, and labor force participation are also potential sources of inefficiency.

download in pdf format
   (116 K)

email paper

This paper is available as PDF (116 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Published: Shelly Lundberg & Robert Pollak, 2003. "Efficiency in Marriage," Review of Economics of the Household, Springer, vol. 1(3), pages 153-167, September.

Users who downloaded this paper also downloaded these:
Pollak w11239 Bargaining Power in Marriage: Earnings, Wage Rates and Household Production
Lundberg and Pollak w12908 The American Family and Family Economics
Pollak w9232 Gary Becker's Contributions to Family and Household Economics
Becker A Theory of Marriage
Stevenson and Wolfers w12944 Marriage and Divorce: Changes and their Driving Forces
 
Publications
Activities
Meetings
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us