We extend the search-matching model of the marriage market of Shimer and Smith (200) to allow for labor supply and home production. We characterise the steady-state equilibrium when exogenous divorce is the only source of risk. We study nonparametric identification using cross-section data on wages and hours worked, and we develop a nonparametric estimator. The estimated matching probabilities that can be derived from the steady-state flow conditions are strongly increasing in male and female wages. We estimate the expected share of marriage surplus appropriated by each spouse as a function of wages. The model allows to infer the specialisation of female spouses in home production from observations on wages and hours worked.
Assortative matching and search with labor supply and home production
11 March 2013
Working Paper (CWP07/13)