The family firm: marriage
Once people marry, in many ways their individualistic, or market-like, behaviour changes so that it more resembles behaviour within the firm. They are concerned with what Becker (1991) calls ‘maximization of household production’, which broadly includes not only children, consumption goods and leisure time to enjoy them, but also values like intimacy and love.
As with commercial firms, there will be no day-to-day accounting: as Ben-Porath (1980) noted, large outstanding balances will be tolerated. As within the firm, specialization will become important (Becker, 1991). The balance between household and labour force participation will change with changes in the spouses’ opportunity costs (England and Farkas, 1986) though, as Becker (1991) suggests, women for biological reasons always have the comparative advantage in child rearing and, because child care and other household jobs may be done at the same time, may be the only spouse to work in both the labour force and household production. Legally, the paradigm is the covenant, far more difficult to dissolve than the ordinary contract and requiring state action (divorce) to do so (Brinig, 1993, 1994a, 1996).During marriage, couples remain free to invest in their own human or other capital, but more often will choose to invest specifically in the marriage or in each other’s careers. Specific investment in marriages includes retailoring cooking, cleaning or entertainment tastes to suit the other spouse (Lloyd Cohen, 1987). More importantly, it includes the creation and raising of children and the mingling of assets (Zelder, 1993; Brinig and Crafton, 1994). Fuchs (1992) suggests that women may assume more of these roles even in an otherwise egalitarian marriage because they, more than their husbands, prefer children. Investment in the other spouse’s human capital is increasingly important, and has become the focus for much litigation on divorce (Parkman, 1992; Brinig, 1997).
In most marriages couples also specialize, and frequently the specialization is along gendered lines (Becker, 1991; Brinig, 1994c). Although most married women in the United States currently remain in the labour force, they continue to assume a disproportionate share of the household production functions (Manser and Brown, 1980) and are particularly involved with the rearing of children (Zick and Geurer, 1991). Men, on the other hand, tend to specialize in jobs outside the home, including not only labour force participation, but also work on the home exterior, the lawn and the family car. This specialization has the effect of making divorces more costly to women, who typically cannot carry enhanced earning capacity outside the marriage and into other relationships (Landes, 1978; Lloyd Cohen, 1987). Children, who possess some of the attributes of public goods, make some divorces ‘inefficient’ because their relationships with non-custodial parents will necessarily be different following separation (Zelder, 1993).Marriage also functions as insurance (Becker, 1993; Scott and Scott, 1998). It protects the spouses against the vagaries of the marriage market and also from possible setbacks in the labour force. How important this function is may depend upon the spouses’ relative risk aversion. Evidence that suggests that women are more risk-averse than their husbands points to reasons why they may tend to remain in a less than happy marriage, as well as the amount they are likely to invest in the relationship, rather than just in themselves (Brinig, 1995b; Parkman, 1996).
A good deal of recent work involves bargaining within the marriage setting. For example, Manser and Brown (1980) note that the threat of divorce, if credible, may encourage a shirking spouse to perform marital duties. More recently, Lundberg and Pollack (1993) write that, instead of divorce, many quarrelling couples are likely to reach a stalemate in which each spouse will perform the minimum expected, with a resulting distribution of labour along very traditional gender lines. Bergstrom (1995) does the same type of analysis from a game-theoretic approach. Allen and Brinig (1998) extend bargaining to consensual sexual intercourse, with a ‘property right’ belonging to the spouse who is least interested in coitus at any given time during the marriage. As the property right shifts from wife to husband, more adultery and divorces are likely to result.
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