Question

•Consider the two types of marriage models examined in this chapter: the neoclassical model of marriage that focuses on specialization and exchange, and bargaining models.

–A. What is the primary difference between these two models? Why is one called the unitary model?

–B. What is the empirical evidence about which of the above two models of marriage seem most consistent with real life?

–C. For bargaining models, what is meant by the threat point?

Answer 1

a) Specialization model allows increased returns as human capitals are used more intensively. Here spouses specialize in a trade and then marry each other which allows trading at minimal transactions. Here there is no bargaining between marriage partners as they both agree to proper marriage and the marriage mostly functions properly. So participants will not have bargaining power.
In bargaining models, the participants hae bargaining power when the marriage does not function properly. Also a customary gender division of labor is present in this model which leads to bargaining. Non cooperative bargaining models or individual models in which individuals make their own decisions are called unitary model.

C) Threat points in bargaining models are the point in a marriage when both spouses fail to reach an agreement and they both get utilities associated with outcomes. These utilities are called threat points. These threat points may mean divorce in the model. In other cases a lower utility agreement is made during the threat point.