Equilibria in a Model with a Search Labour Market and a Matching Marriage Market
Abstract: The paper analyses the equilibria in an economy with a search labour market and a matching marriage market. The economy is populated by ex-ante homogeneous workers, firms, and marriage partners. Workers simultaneously search for firms in order to work and for marriage partners in order to marry. Firms post wages to attract workers; while marriage partners look for workers in order to marry. I assume that married workers receive a pre-determined flow utility, and that marriage partners derive flow utility equal to the worker's earnings. This provides the link between the two markets. I use noisy search in the labour market to generate a distribution of wages offered and of wages earned. I show that the so called married wage premium can be the consequence of frictions in both markets, without having to resort to the typical explanations, and I give the conditions for this to be the case.
