Heterogeneous human capital, uncertainty, and the structure of plans: A market process approach to marriage and divorce

The family has not been exempt from the multiple and rapidly occurring changes in the world today, particularly in market economies. The number of marriages has declined, age at first marriage has risen, the number of divorces has risen sharply, the fertility rate has declined, and the division of labor within families has changed, not always in ways that might be expected. This paper subjects these developments to a market process analysis, drawing on the voluminous work occurring in family economics. The Austrian theory of capital, with its emphasis on capital heterogeneity, is relevant. We place particular emphasis on the importance of the structure of human capital within marriage and how investments in such human capital have been affected by the uncertainty that these changes have produced. We also examine investments in marriage-specific human capital and in general human capital (particularly as they relate to childcare). This is then related to the incidence of divorce and the causes and spoils from divorce. The advent of no-fault divorce seems to have been seminal in this regard. We end with a brief glance at the future.