Intrafamily Bargaining and Household Decisions

A model of household decisions based on a bargaining
approach is developed providing a comprehensive framework
for the analysis of family behavior. Treating the family as
an economic organization, household behavior is explained by
the cooperation of utility maximizing individuals. The
difference to traditional microeconomic household models is
that theassumption of a joint household utility function
is abandoned. Instead of this, a game theoretic approach is
used to model family decisions as a result of intrafamily
bargaining. Considering the development of the spouses`
human capital in a dynamic approach, the long-term effects
of intrafamily specialization in market work and work at
home are analyzed. Onemajor finding is that in a dynamic
setting non-Pareto efficient allocations may result.
Empirical tests demonstrate the relevanace of the bargaining
approach.