Powerful currents have reshaped the structure of families over the last century. There has been (i) a dramatic drop in fertility and greater parental investment in children; (ii) a rise in married female labor-force participation; (iii) a decline in marriage and a rise in divorce; (iv) a higher degree of assortative mating; (v) more children living with a single mother; (vi) shifts in social norms governing premarital sex and married women's roles in the labor market. Macroeconomic models explaining these aggregate trends are surveyed.
Marriage has declined since 1960, with the drop being bigger for non-college educated individuals versus college educated ones. Divorce has increased, more so for the non-college educated vis-a-vis the college educated. Additionally, assortative mating has risen; i.e., people are more likely to marry someone of the same educational level today than in the past. A unified model of marriage, divorce, educational attainment and married female labor-force participation is developed and estimated to fit the postwar U.S. data.
The present paper develops a theoretical model of labor supply with domestic production. It is shown that the structural components of the model can be identified without using a distribution factor, thereby generalizing the initial results of Apps and Rees (1997) and Chiappori (1997). The theoretical model is then estimated using the ATUS data. The empirical results are compared to those obtained from a similar model without domestic production.
Most econometric models of intrahousehold behavior assume that household decision making is efficient, i.e., utility realizations lie on the Pareto frontier. In this paper we investigate this claim by adding a number of participation constraints to the household allocation problem. Short-run constraints ensure that each spouse obtains a utility level at least equal to what they would realize under (inefficient) Nash equilibrium.