ECONOMIC DECISION-MAKING BY COHABITORS - FINDINGS REGARDING INCOME POOLING

Cohabitation rates are increasing in the US but little is known about how cohabiters make economic decisions. For instance, do female cohabi ters treat their male partner's income as shared household income when choosing hours worked? Does income sharing differ among types of coha biters? This study investigates whether or not cohabiters pool income by drawing inferences from a generalized model of labour supply. The e mpirical work uses data from the 1993 Current Population Survey and th e 1987 National Survey of Families and Households. These data sets pro vide evidence that cohabiters, taken as a group, do not pool all incom e. However, there is also evidence that cohabiters are not homogeneous in their behaviour; income pooling is not rejected for cohabiters in longer-term relationships and for those who have a biological child to gether.