Author(s): Bonilla R, Kiraly F
Abstract: The paper shows a model that allows for endogenous divorce in a model with frictional marriage and labour markets. It shows that the threat of divorce affects the wages accepted by married individuals, even if divorce does not actually occur. This generates a difference between the wages accepted my married and single workers. This is linked to the emerging literature that studies the effect of marriage and marital transitions on the worker’s strategies regarding their labour market participation
Keywords: wages, divorce, frictional labour markets
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Dr Roberto Bonilla Trejos
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