Working Paper: CEPR ID: DP1312
Authors: Kai A. Konrad; Kjell Erik Lommerud
Abstract: We suggest a family bargaining model where human capital investment decisions are made non-cooperatively in a first stage, while day-to-day allocation of time is determined later through Nash bargaining, but with non-cooperative behaviour as the fall back. Several authors have claimed that non-cooperative behaviour is a more appropriate fall back in family bargaining than utilities as single. We argue that the empirical implications of the two approaches are quite parallel. A second finding is that over-investment in education may be even more of a problem in our mixed cooperative-non-cooperative model than in a fully non-cooperative one.
Keywords: family bargaining; education
JEL Codes: D13; J22; J24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| noncooperative behavior as a fallback in family bargaining (C72) | empirical implications that are quantitatively similar to those derived from using utilities as single (C20) |
| higher one's labor market wage rate relative to that of the other partner (J31) | more favorable intrafamily distribution from that person's viewpoint (D63) |
| educational investments made prior to family bargaining (J24) | inefficiencies in the allocation of resources (D61) |
| expectations about future cooperation in bargaining (C79) | current investment decisions (G11) |
| current investment decisions (G11) | inefficiencies in human capital allocation (J24) |