Social Effects, Household Time Allocation and the Decline in Union Formation

Almudena Sevilla-Sanz, Congressional Budget Office (CBO)

Economic theories of the household and the marriage market provide an explanation for differences in household formation rates over time based on the evolution of female wages. However, cross-country differences in female market human capital are unlikely to account for the divergence in existing union formation rates across developed countries. I develop a partial equilibrium model that formally analyzes the effect of social externalities on the woman's decision to enter a household. Social externalities are characterized as gender roles that constrain potential partners away from the efficient allocation of household labor and diminish the gains to entering a union. I test the model using individual level cross- country and longitudinal data (ISSP 1994 and 2002) containing information on attitudes toward gender roles and the allocation of time to household production. The empirical findings support the proposed model of social constraints upon the allocation of household time.