The Marriage Premium on Health: A Structural Analysis using an Equilibrium Search and Matching Model of Marriage and Divorce

Abstract

Data indicate that married individuals have lower mortality rates and are reported to be healthier than singles. However, drawing the conclusion that marriage inherently improves health can be misleading. A key challenge in estimating the effect of marriage on health lies in disentangling self-selection into marriage from the protective effects of marriage. The complexity arises from the selection of the healthier or unhealthier into marriage or into single through divorce. The objective of this paper is to explain the health gap between married and single individuals using an equilib-rium model of marriage search and matching. The model takes into account the endogeneity of mar-riage choice and different household choices on time, consumption and medical investment that both man/woman and single/married couples are likely to face during their life cycles. The model, which incorporates health-driven selection in the marriage market, is structurally estimated by matching model-generated moments with those observed in the data. Using the estimated model, several coun-terfactual scenarios are analyzed, such as eliminating the gender wage gap, removing age preferences in the marriage market, and altering Pareto weights to explore the impact of household allocations on the health trajectories of married couples. The findings suggest that married households benefit from economies of scale in home production and achieve higher efficiency in medical investments com-pared to single households. Furthermore, within married households, the advantages of marriage are not uniform across genders. Through counterfactual analysis, we identify changes in Pareto weights as the most significant factor in affecting the health disparity associated with marital status.