Brown Bag seminar in Economics | Yifan Lyu
Welcome to the Brown Bag Seminar in Economics organized by the Department of Economics, SSE. The seminar speaker is Yifan Lyu, SSE who will present "Economic Incentives and Learning in the Mating Market: Evidence from Sweden"
This paper investigates the role of learning—the process by which partners gather information about their compatibility—has in explaining the marital transition. To this end, I exploit a pension reform in Sweden that penalises late marriages for cohabiting couples and provides empirical evidence that couples who are incentivised by the reform are mostly long-term cohabiting couples with lower uncertainty about match quality. Given that pre-marital cohabitation reduces divorce hazard, these couples are less likely to divorce in observable future. However, if these cohabiting couples are no different from couples married earlier, then couples that marry due to time pressure face higher probability of divorce. The effect is more salient among couples with shorter premarital cohabitation. These stylised facts imply that couples place greater value on initial cohabiting periods, and it is costlier to disrupt learning in the early stage of a relationship. By linking the benefits couples expect to receive with the loss of information they could tolerate due to the time constraint, I develop a structural model with endogenous cohabitation, marriage and divorce where couples learn about match quality over their relationship. I assess the welfare changes of the reform and evaluate the effect of de facto marriage law in the counterfactual experiment.
Yifan Lyu is a Ph.D. student at SSE, in the Department of Economics.
This seminar takes place at Stockholm School of Economics, Sveavägen 65, in room A542.
Please contact kathrine.abelson@hhs.se if you have any questions.