Time and Surplus Allocation Within Marriage

We construct a non-cooperative dynamic model of time and surplus allocation between partners in a marriage. Partners must choose between allocating time to household public goods production or career activities, and both activities exhibit learning effects. While complete specialization within the marriage is efficient, the non-contractibility of money transfers leads to inefficient incomplete specialization. While gender-based wage differences can implement the efficient outcome at the expense of equity in distribution, inefficiently will arise as these differences disappear. One set of implications is that as female-male wage differentials disappear that there will be a discrete jump in female labor force participation and a discrete fall in fertility. Furthermore the model implies that lifetime fertility will be lower (and later) than that predicted by cooperative models, a phenomenon we label the “suppressed demand for children”, and that women will bear disporportionately more of the household tasks given their wage rates and labor force participation.