Marital-property scheme, marriage promotion and matching market equilibrium

Abstract

[ACCESS RESTRICTED TO THE UNIVERSITY OF MISSOURI AT REQUEST OF AUTHOR.] This paper studies how liberalization in choosing marital-property schemes may impact the aggregate marriage rates. We use a Two-Sided Matching model and search model as theoretical frameworks to study the stable matching patterns given (1) static matching under output certainty, (2) static matching under output uncertainty and risk aversion, and (3) search and matching with information costs. The derived stable matching patterns are then incorporated to analyze the marriage rates in the rigid and the flexible marital-property schemes in stylized marriage markets. Given participants' traits are complements in the joint production, as long as the main purpose of matching is to obtain the benefits of the joint production or the marital specific bonus, the marriage rates are higher in the flexible scheme. However, if the purpose of matching is mainly to share the income risk rather than to generate income, the rigid scheme can provide legally-enforced insurance for risk-averse participants and therefore performs as well as the flexible scheme in terms of the marriage rates.