Communication Technology Advance and Consequences: Using Two-sided Search Model

Do advances in communication technology, such as online dating sites and social networking services, change our perception of the value of being in a relationship? In this paper, I construct a non-stationary two-sided search market equilibrium model. Using it, I analyze the quantitative effects of advances in communication technology on individuals’ marital behavior and welfare. The model includes cohabitation as well as marriage as individual choices. I provide a new proof of the existence of the non-stationary market equilibrium. Using the model’s equilibrium condition, I develop a new identification argument to separately identify parameters that have been considered important but difficult to identify. I estimate the structural model with indirect inference, using the National Longitudinal Study of the High School Class of 1972 and the National Longitudinal Survey of Youth 1997. I quantify the effects of advances in communication technology on society and reveal which types of individuals benefit from these changes.