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To analyze the impact of changes in the value of marriage on household decisions, we present a limited commitment framework of household behavior in which decisions are made regarding labor supply, divorce and housing demand over the lifecycle. We identify and estimate our structural model using exogenous variation in female labor supply and divorce rates due to the White v. White case in England. We conclude that limited commitment dampens the added worker effect, while the changes in the value of marriage due to a housing price shock have an asymmetric impact on individual welfare both across gender and marital state. We also show that tightening the credit market in different ways can lead to opposite behavior in terms of household savings andfemale labor supply.
Authors

Research Associate Université libre de Bruxelles
Bram is a Research Associate of the IFS, a Professor of Economics at ULB and a Professor of Mathematics and Statistics at KU Leuven.
PhD Candidate European Center for Advanced Research in Economics and Statistics

Senior Lecturer University of Sussex
Tom is a Senior Lecturer in Economics at the University of Sussex and Research Associate at the Institute for Fiscal Studies (IFS).
Working Paper details
- DOI
- 10.1920/wp.ifs.2023.3523
- Publisher
- Institute for Fiscal Studies
Suggested citation
B, De Rock and M, Kovaleva and T, Potoms. (2023). A spouse and a house are all we need? Housing demand, labor supply and divorce over the lifecycle. 23/35. London: Institute for Fiscal Studies. Available at: https://ifs.org.uk/publications/spouse-and-house-are-all-we-need-housing-demand-labor-supply-and-divorce-over (accessed: 17 February 2025).
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