Personality and the Dynamics of Marriage: A Structural Interpretation

This paper examines how personality shapes intra-household bargaining, marital stability, and the allocation of resources within marriages. We use rich data from the HILDA Survey that combines information on spouses’ personalities, wages, time use, and marital histories. In the data, personality is strongly associated with labor-market productivity, marriage and divorce patterns, and the division of paid work and childcare within couples. To interpret these patterns, we estimate a life-cycle collective household model with limited commitment and endogenous marriage and divorce. Within this framework, personality affects: individual wage processes, the quality of marital matches, and preferences over home production. We use the estimated model to quantify the mechanisms through which personality generates heterogeneity in household behavior. The results show that personality matters not only through wage differences but also by altering spouses’ outside options and the set of feasible allocations. Counterfactual simulations highlight how personality influences specialization patterns, the evolution of bargaining power over the life cycle, and the way welfare losses from adverse shocks are shared between spouses