Cohabitation, Marriage, and Divorce in a Model of Match Quality

Abstract

The objective of this research is to develop and estimate an economic model of nonmarital cohabitation, marriage, and divorce that is consistent with current data on the formation and dissolution of relationships. Jovanovic's (1979) theoretical matching model is extended to help explain household formation and dissolution behavior. Implications of the model reveal what factors influence the decision to start a relationship, what form this relationship will take, and the relative stability of the various types of unions. The structural parameters of the model are estimated using longitudinal data from a sample of female high school seniors from the U.S. New numerical methods are developed to reduce computational costs associated with estimation. The empirical results are mostly consistent with previous literature but have interesting interpretations given the structural model.