Collateralized Marriage

Marriage rates have become increasingly stratified by homeownership. We investigate this in a household model where investments in public goods reduce future earnings and, thus, divorce risk creates inefficiencies. Access to a joint savings technology, like a house, collateralizes marriage, providing insurance to the lower-earning partner and increasing specialization, public goods, and value from marriage. We use idiosyncratic variation in housing prices to show that homeownership access indeed leads to greater specialization. The model also predicts that policies that erode the marriage contract in other ways will make wealth a more important determinant of marriage, which we confirm empirically. (JEL D12, D86, G51, H41, J12, R31)