One of the most striking changes in American society in the last forty years has been the decline and delay in marriage.
 

The fraction of young men and women who have never been married increased significantly between 1970 and 2000.
 

Idiosyncratic labor income volatility also increased over the same period.
 

This paper establishes a quantitatively important link between these two facts.
 

Specifically, if marriage involves consumption commitments, then a rise in income volatility results in a delay in marriage.
 

Marriage, however, also allows for diversification of income risk since earnings fluctuations between spouses need not be perfectly correlated.
 

We assess the hypothesis that rising income volatility contributed to the delay in marriage vis-?-vis other explanations in the literature, using an estimated equilibrium search model of the marriage market.
 

We find that the increase in volatility accounts for about 26 of the observed delay in marriage.
 

Thus, we find that the effects of consumption commitments due to increased income volatility outweigh the effects of the insurance gains provided by spouses.

     
Jel Nos.: E24, D13, J12

In this paper we reexamine the commonly invoked argument that due to the existence of a negative correlation between earning ability and family size, the latter can be used as a `tagging` device, justifying subsidizing children (via provision of child allowances) to enhance egalitarian objectives.
 

Employing a benchmark setting where the quality-quantity paradigm holds, we show that the case for subsidizing children is far from being a forgone conclusion.
 

We demonstrate that the desirability of subsidizing children crucially hinges on whether benefits are means-tested or being accorded on a universal basis.

     
Jel Nos.: D6, H2, H5

Matthias Doepke, Moshe Hazan and Yishay D. Maoz

We argue that one major cause of the U.S. postwar baby boom was the rise in female labor supply during WorldWar II.
 

We develop a quantitative dynamic general equilibrium model with endogenous fertility and female labor force participation decisions.
 

We use the model to assess the impact of the war on female labor supply and fertility in the decades following the war. For the war generation of women, the high demand for female labor brought about by mobilization leads to an increase in labor supply that persists after the war.
 

As a result, younger women who reach adulthood in the 1950s face increased labor market competition, which impels them to exit the labor market and start having children earlier.
 

The effect is amplified by the rise in taxes necessary to pay down wartime government debt. In our calibrated model, the war generates a substantial baby boom followed by a baby bust.

Jacob Glazer and Ariel Rubinstein
 

We study a principal-agent model in which the agent is boundedly rational in his ability to understand the principal’s decision rule.
 

The principal wishes to elicit an agent’s true profile in order to determine whether or not to grant him a certain request.
 

The principal designs a questionnaire and commits himself to accepting certain responses.
 

In designing such a questionnaire, the principal takes into account the bounded rationality of the agent and wishes to reduce the success probability of a dishonest agent who is trying to game the system.
 

It is shown that the principal can construct a sufficiently complex questionnaire that will allow him to respond optimally to agents who tell the truth and at the same time to almost eliminate the probability that a dishonest agent will succeed in cheating.

     
Jel Nos.: D0

It is argued that, contrary to a rather prevalent view within economic theory, rationality does not imply Bayesianism.
 

The note begins by defining these terms and justifying the choice of these definitions, proceeds to survey the main justification for this prevalent view, and concludes by highlighting its weaknesses.