Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

EC135 Applied > Family Economics > Flashcards

Family Economics Flashcards

1
Q

What is cohabitation?

A

Where two people who are in a relationship live together but are not married

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Define martial history

A

An individual’s pattern of marriage & divorce over their lifetime

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What is a fault based system for divorce law?

A

Required proof that the other person was at fault in order to divorce

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Mutual consent vs unilateral divorce system

A

Mutual consent = both spouses must agree to a divorce

Unilateral = one spouse can choose to divorce even if the other disagrees

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Why was White vs White (2000) so important?

A

It meant future divorce settlements didn’t look at who actually earned the money, it shouldn’t favour the money earner at the expense of the child carer.

Future rulings should start from 50:50 settlement & deviations should be justified.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is selection and how does it explain changes in divorce rates over time ?

A

As duration of marriage rises, divorce rates falls.
This is because over time, low match quality couples have divorced, leaving a select sample of high match quantity couples. Hence the divorce probability declines.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is learning & how does it explain the relation between divorce probability & age/duration of marriage?

A

When people marry, they learn about match quality. Early marriages = shorter period of learning = more likely to be low quality. Also explains initial rise in divorce as duration of marriage rises: at the start haven’t learned much = not sure if high or low match quality yet.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

How does selection explain the probability of remarriage?

A

Over time, people who are attractive mates have remarried.

this leaves a select sample of unattractive mates who struggle to remarry hence remarriage probability decline.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What 2 things does family structure affect?

A

1) whether someone works in the first place

2) if someone works, what wage they receive

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What effect does marriage have on male & female wages?

A

Married premium for men = higher wage

Married penalty for women = lower wage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

3 reasons for marriage premium for male wages

A

1) discrimination
2) supporting a family = more committed to LF
3) selection - married men higher quality which allowed them to attract a mate in the first place.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

3 reasons for marriage penalty for female wages

A

1) discrimination
2) less committed to LF due to childcare - division of labour at home
3) self fulfilling - parents of girls anticipate marriage penalty = invest less in their education

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Briefly explain the difference in difference method

A

Establish a causal relationship.
Compare Changes in two groups: control & treatment group
Assume parallel trends between the groups
Net effect of treatment = change in treatment group - change in control group

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What is positive assortative mating?

A

Where people marry those with similar characteristics to themselves e.g. Highly educated man marries a highly educated woman

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Why was positive AM less common in the past?

A

Females uncommon at higher education levels = educated men had to marry down. Today education of women and men more similar.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

4 gains from marriage

A

Sharing of public goods e.g. Children
Division of labour / specialisation
Credit
Risk sharing

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is schooling? How does it contribute to the effect of positive AM on inequality?

A

Effect of one persons education on generating martial surplus through increasing the others education.
Higher educated people produce even more martial surplus when matched to another highly educated person = more inequality.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What letters represent public & private goods for household models

A 
Q = public food 
q = private good
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

How does this household model differ from macro models of households?

A

Here we look at men and women have different preferences and different utility functions. We do not assume the household is a single unit with the same preferences.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

How does a household utility function arise in the unitary model?

A

It just appears - we don’t care about how. There is a benevolent dictator who makes the decisions & internalises everyone’s preferences

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What demands do we get from unitary model?

A

Marshallian demands: Q(P, p, X) and q(P, p, X)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is income pooling?

A

Wife’s & husband’s incomes are pooled before spending. Demand only depends on total income - not relative incomes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What are the 2 implications of income pooling

A

1) the source of income doesn’t matter for consumption

2) a £1 increase in husband’s income has the same effect on consumption as a £1 increase in the wife’s income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

Which 3 authors test the income pooling assumption?

A

Lundberg, Pollak and Wales

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Which scheme do LPW test? What is their method?

A

Child benefit scheme which changed in 1977, causing switch from addition to husband income to wife income.
They run a regression to see the change ratio of expenditure on children’s and wife’s clothing to husbands as the scheme changes.

26
Q

Limitations of LPW

A

Didn’t use DiD method - only looked at the change in treatment group, no control group. Underlying trends such as changes in fashion & brand consciousness among children could’ve caused expenditure to rise regardless of the scheme change.

27
Q

Which model of households does not rely on income pooling assumption?

A

Collective model

28
Q

What is the household utility function in the collective model?

A

Household utility function = a weighted average of husband’s and wife’s individual utility functions

29
Q

What do the weights in the collective model reflect?

A

Bargaining power.

M = the Pareto weight

30
Q

2 assumptions of collective model of households

A

1) each household has a unique decision process

2) the outcome is always Pareto efficient

31
Q

What demands result from the collective model?

A

Collective demands: Q(P, p, X, M) and q(P, p, C, M)

32
Q

Why is there no income pooling in collective demand model?

A

Relative incomes determine bargaining power
If wife’s income rises = M rises
Increase in M = affects demands so household consumption choice will tend more towards wife’s preferences

33
Q

If M=1 and the wife is not altruistic, was is the result of the collective model?

A

Household utility = wife’s utility function
Wife’s consumption = household consumption
Husband’s consumption = 0

34
Q

How do we solve the collective model if M=0.5?

A

Do not need to solve properly.
Work out demands for when M=1 and M=0. Our best guess for demands when M=0.5 is the average of the demands in the extreme cases.

35
Q

3 key assumptions of the matching model

A

1) two populations: men & women (heterosexual)
2) one to one matching
3) gains generated by matching are specific to the match

36
Q

What is frictionless matching?

A

Perfect & costless information about potential matches available to everyone. There are no costs to matching & changing partners. No uncertainty about future potential matches and their value = everyone has a preference order in their head now.

37
Q

2 conditions for marriage market stability

A

1) individual rationality: no married person would prefer to be single
2) no blocking pairs - no two people who would prefer to couple up with each other rather than their current matches

38
Q

What is transferable utility?

A

TU = there is a medium of exchange that allows partners to transfer resources between them at a fixed ER.

39
Q

What type of preferences do we need for TU?

A

Quasi linear

40
Q

What is non transferable utility?

A

NTU = cannot transfer resources between each other

41
Q

What does Vij describe?

A

The utility of woman j if she matches with man i.

42
Q

Who’s algorithm do we use for matching when we have NTU? What is it called?

A

Gale & Shapley

The deferred acceptance algorithm

43
Q

What two assumptions are needed for the deferred acceptance algorithm?

A

1) preference ordering transitive and complete

2) preferences are strict = no indifference

44
Q

Briefly explain the steps of the deferred acceptance algorithm

A

let one side make proposals e.g. Women, each woman proposes to her fave man, each man who receives >1 propose accepts the best - on hold, do not accept until the end, rejected women then propose to their 2nd fave man, men reject all but most preferred, algorithm ends & all matched.

45
Q

What is theorem 1 of deferred acceptance algorithm

A

There is always a stable match - no blocking pairs.

The algorithm ends in a finite number of steps as women don’t propose to the same man twice.

46
Q

What is theorem 2 of deferred matching algorithm?

A

Matching may not be unique. If women propose, it yields the optimal matching for women. If men propose, the outcome may differ.

47
Q

When does it not matter whether men/women propose in the deferred matching algorithm?

A

When men & women have same preferences e.g. M1 fave is W1; W1 fave is M1.

48
Q

When we have a single trait for NTU, how does it affect preference ranking?

A

All women agree on the ranking of men and all men agree on the ranking of women.

49
Q

When do we get positive assortative mating under NTU for single trait?

A

h(X, Y) is strictly increasing. E.g. h(X, Y) = X + Y

50
Q

When do we get negative assortative mating under NTU for single trait?

A

When h(X, Y) is decreasing e.g. h(X, Y) = X - Y

51
Q

Why is TU perhaps more realistic than NTU?

A

Unattractive agents can compensate by offering a potential partner a bigger share of the martial surplus = potential to outbid more attractive competitors. Example = dowries

52
Q

What model do we use for matching under TU?

A

Becker-Shapley-Shubik model

53
Q

Under TU, Uij and Vij are now…

A

Endogenous - splitting of household output is not given, it depends on factors within the model as individuals can now transfer between them.

54
Q

Theorem 3: Stability under TU =

A

a matching that maximises total output over all possible assignments I.e. Sum of Eij s is maximised.

55
Q

When do we get positive assortative mating for a single trait with TU?

A

h(X, Y) is supermodular
Second cross derivative is positive - complementarities between X&Y. Increase in Y will increase h more if X is high than when X is low.
h(X’, Y’) + h(X, Y) greater than/equal to h(X’, Y) + h(X, Y’)

56
Q

When do we get negative assortative mating for a single trait with TU?

A

h(X, Y) is submodular
Second cross derivative is negative = substitutability
Increase in Y will increase h more if X is low.
h(X’, Y’) + h(X, Y) < equal to h(X’, Y) + h(X, Y’)

57
Q

How does NTU vs TU affect matching?

A

NTU = positive AM more common as cannot compensate for traits

TU = ability to compensate so negative AM more common.

58
Q

What does the Becker-Coase theorem state?

A

Divorce laws do not matter for divorce as utility is transferable so if divorce requires mutual consent & only the wife wants to divorce, she can offer the husband something to get him to consent. If divorce is unilateral, the husband can offer the wife something to keep her from divorcing.

59
Q

Criticisms of B-C model

A

For TU preferences must be quasilinear. Suppose divorce law changes giving the man 99% post-divorce assets, wife would have to give up lots of her consumption to buy him out. If she’s almost starving, MU of consumption is high = contradicts quasilinear where MU of each unit is constant. Thus divorce laws impact divorce.

60
Q

When was the divorce reform act? What did it change?

A

1969
Fault based –> no fault system
Mutual consent –> unilateral system

EC135 Applied (3 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions