The extent to which individuals commit to their partner for life has important implications. This paper develops a lifecycle collective model of the household, through which it characterizes behavior in three prominent alternative types of commitment: full, limited, and no commitment. We propose a test that distinguishes between all three types based on how contemporaneous and historical news affect household behavior. Our test permits heterogeneity in the degree of commitment across households. Using recent data from the Panel Study of Income Dynamics, we reject full and no commitment, while we nd strong evidence for limited commitment.
First version, November 18, 2022
D12: Consumer Economics: Empirical Analysis
D13: Household Production and Intrahousehold Allocation
D15: Intertemporal Household Choice; Life Cycle Models and Saving
J22: Time Allocation and Labor Supply
J31: Wage Level and Structure; Wage Differentials