Abstract
We examine theoretically and empirically consumption over the early part of the life-cycle. The main focus is on the transition from being single to living with someone else. Our theoretical model allows for publicness in consumption; uncertainty concerning marriage; differences between lifetime incomes for prospective partners and a marriage premium. We develop a two period model to bring out the main features of the impact of marriage on consumption and saving. We then develop a multi-period model that can be taken to the data on expenditures by singles and couples aged between 18 and 30. Our empirical work is based on individual based quasi-panels from UK expenditure survey data from 1978 to 2005. The model fits the data relatively well. We find that expenditure by couples leads to 20-40 % more consumption than the same expenditure split between two comparable singles.
| Original language | English |
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| Publisher | Centre for Advanced Microeconometrics, Department of Economics, University of Copenhagen |
| Number of pages | 16 |
| Publication status | Published - 2009 |