Marriage, Employment Participation and Home Production in Search Equilibrium
We model a marriage market where singles consider the prospects of employment and income of their potential spouses, and married couples make joint decisions on home production and labor participation. This double interaction between the marriage and labor markets is affected by search frictions in both. We characterize the job search strategies of different couples; equal individuals have different behaviors depending on their spouses. When the search for mates is easy, people marry others with very similar productivity, and both spouses have the same behavior in the labor market. This natural outcome is socially inefficient as it takes some high productivity people off the labor market and viceversa. It also expands income distribution. Some empirical findings in the labor literature are supported theoretically here.