4. Implications
The average woman in the United States gives birth to 1.9 children, her average age at first birth is 25 years old and according to the CDC marries at an average age of 24.8. The unitary model ofthe household due to Samuelson (1956) implies that wife and husband jointly maximize a common utility function, and the transformation from single to married and married towards divorced or widowed implies that economic agents face a common, individual utility function. This likely gives different solution for an agent’s utility maximizing decision and helps explain the state-dependence of labor market adjustment patterns. Moreover, from a game-theoretic vantage point, bargaining models of marriage show that women have a lower bargaining power, since their prospects outside the marriage with lower wages (time allocated to children reduces experience and human capital) are worse. This implies that women are forced to take jobs in which adjustments along the intensive margin are more likely and pay lower wages. Our results have several implications for the design of economic policy. Recall that the intensive margin is more important for women. It follows that labor tax reforms, labor market reforms, reforms related to an aging economy, and reforms that increase female labor force participation have larger effects on women than on men, and female labor supply elasticity is greater. Therefore, policy makers should take into account that reforms most likely have asymmetric effects across age and occupation.
