Pierre André Chiappori (Columbia) "Family Economics" - Cemmap

490 11. Marriage, Divorce, Children
with raising the contingent payment, σ, from 0 to wf −c ∗
2−p benefits each father
separately because of the rise in the expected utility of the child. The
rise in the remarriage prospects as p rises from 0.344 to 0.356 raises the
incentives of all fathers to contribute to their ex-wives. In this respect, a
higher aggregate divorce rate can serve as a coordination device that can
benefit children and raises the incentives to have children.
11.8.3 Transfers, the ex-ante perspective
At the interim stage, when the fertility has already been determined, the
purpose of the contract is to induce the custodial mother to spend all her
time on the child if she remarries. A contract that is signed at the time of
marriage can also influence the divorce and the father would be willing to
commit for a broader range of p. Thus, in contrast to the ex-post contract,
where the husband gains from the commitment to pay the single mother
only if she remarries, the ex ante contract can benefit the father even if the
mother remains single. Of course, the husband is willing to pay only if the
mother would not have the child in the absence of contract. It is easy to
find parameters of the model such that the mother would prefer to have a
child even without a contract, in which case there is no role for voluntary
ex-ante commitments by the husband. However, we shall focus here on the
case in which, in the absence of binding contracts, the mother does not wish
to have the child but if binding contracts are enforced then the mother may
prefer to have a child, depending on the expected remarriage rate and the
decision of others to have children.
Suppose that all couples have children and sign an ex-ante contract, at
the time of marriage, that promises the mother σ = wf −c ∗
2−p if the mother
remains single. Then, the gains from divorce are the same for the two
partners and separations are efficient for all p and, therefore, the expected
utility at the time of marriage is the same for the husband and wife. Since
under such contract both partners want the child at the same values of p,
the production of children is efficient too. Both partners would agree to
sign such a contract at the time of marriage, if their expected utility is
higher than it would be in the absence of contract and no children. Finally,
the ex-ante contract is renegotiation proof, because it coincides with the
interim contract.
It is puzzling why ex-ante contracts that are signed at the time of marriage
are not prevalent among all couples with children. The implementation
of such contracts in earlier times suggests that the enforcement of
ex-ante contracts is not the issue. Rather, in modern societies with free
marriage, based in part on mutual attraction, the general sense is that
emotional commitments are more important than legal agreements and
thinking of contingencies and writing them down may "kill love". However,
prenuptial contracts are often signed, at the time of marriage, by couples