@TechReport{iza:izadps:dp1752, author={Iyigun, Murat and Walsh, Randall P.}, title={Building the Family Nest: Pre-Marital Investments, Marriage Markets and Spousal Allocations}, year={2005}, month={Sep}, institution={Institute of Labor Economics (IZA)}, address={Bonn}, type={IZA Discussion Paper}, number={1752}, url={https://www.iza.org/publications/dp1752}, abstract={We develop a model of the household in which spousal incomes are determined by pre-marital investments, the marriage market is characterized by assortative matching, and endogenously-determined sharing rules form the basis of intra-household allocations. By incorporating pre-marital investments and spousal matching into the collective household model, we are able to identify the fundamental determinants of endogenously determined and maritally sustainable intra-marital sharing rules. In particular, we find that all sharing rules along the assortative order support unconditionally efficient outcomes where both pre-marital investments and intra-household allocations are efficient. The efficiency of both pre-marital choices and household allocations then enables us to show that, for each couple, the marriage market generates a unique and maritally sustainable sharing rule that is a function of the distribution of pre-marital endowments and the sex ratios in the market.}, keywords={marriage;bargaining;household labor supply;collective model}, }