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Marriage Market: S & D • Uses Becker Model: uses productivity as proxy for utility. – How marital status choice is made; – How gains of trade are divided between husband and wife? • Need basics (M=male; F=female): – Output: • For single person: ZM and ZF • For married-couple HH: ZMF – Share of Output: • Amount of ZMF to husbnd = SM • Amount of ZMF to wife: = SF Further Details: Marriage Market • NOT assuming that SM = SF. • Note: SM + SF = ZMF. • Marriage “rule”: – Marry if expect to be better off: – Man: marry if SM ZM. – Female: marry if SF ZF. • Implies that for married couple: – SM + SF ZM + ZF. – So: ZMF ZM + ZF: – Gains to marriage for most individuals. Basics of S & D Model • Price term: SF: – What a woman must receive to be willing to marry and what a man is willing to pay to be married. • Restate marriage “rule” and resulting shape of S curve: – Marry only if SF ZF. – SF ranges from very low to very high; when SF low, very few women willing to marry. – When SF very high: all women willing to marry; curve becomes vertical since no more single women. – Shows positive relationship between price and quantity supplied. • Law of Supply Marriage Model (continued) • To complete model, need demand curve (of men) FOR wives. • Need SAME price: – Know: When SF high, SM very low.I.,e., when pay a lot to wife via SF, portion left over for husband via SM is small. – So man prefers low SF (and so high SM). • Yields negative relationship between man’s willingness to marry and price of marriage (I.e., amount of productivity within marriage that must go to wife). • Consistent with Law of Demand. – See Figures 7 and 8. Marriage Market Equilibrium • Horizontal axis: # men or women willing to marry. • Vertical axis: price (SF): what woman gets; what man pays. • Equilibrium: – not determined by negotiations within each single marriage; – general terms set by market (like social norms); – interpret: “..this is what married life is like for men and women.” • NOT showing how pick specific partner, rather, shows: – general decisions regarding marriage. – how men/women treated within marriage. More on Equilibrium • Marriage market equilibrium: – unique price SF* that sets S = D. • Explain equilibrating process as with any market: – If price too low as at SFL: • Qd Qs: more men looking than women willing to marry; • shortage; • so men bid up price. – If price too high as at SFH : Qs Qd. • At equilibrium: – See N* – # unmarried men – # unmarried women. Effect of Changes in S & D • Three examples: – 1) change in sex ratio – 2) women’s improved L mkt opportunities – 3) Effect of birth control, etc. • Change in sex ratio: – – – – See Table 4; Differences by age and race. Also: differences by education. Effect of in sex ratio: • # women w/no # men • Shift parallel part over to right • See slope (same % in #women ; smaller # at low SF; larger # at high SF). • See Figure 9. Other Changes in S & D • Increase in women’s wages: – Will ZF (well-being while single). – Shifts S upwards: • each woman now willing to marry at higher value of SF than before. • see Figure 10; • no change vertical point. • More effective birth control: – ZF and ZM – See Figure 11: • start with S2 and D2 • AIDS: start with S1 and D1