The Distribution of Household Income in Marriage

This paper deals with three topics which have been neglected in the economics of the family literature. First, how is the distribution of household income endogenously determined within a marriage? Second, what is the desirable allocation of authority to determine the sharing rule of household income? Third, does free negotiation between wife and husband contribute to achieving a desirable outcome? We analyze these topics within a non-cooperative game model of the family where either the husband or wife decides the share of total household income for private consumption. One of our findings is that the allocation of authority can be determined by examining the relative efficiency of the partners in earning salary, and varies in a non-monotonic way.