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The Risk of Divorce and Household Saving Behavior

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  • Libertad González
  • Berkay Özcan

Abstract

We analyze the causal impact of an increase in the risk of marital dissolution on the saving behavior of married couples. We use the legalization of divorce in Ireland in 1996 as an exogenous shock to the risk of divorce. We propose several comparison groups (unaffected by the law change) that allow us to use a difference-in-differences approach. Our findings suggest that the legalization of divorce led to a significant increase in the propensity to save by married individuals, which is consistent with individuals saving more as a response to the increase in the probability of marital breakup.

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Bibliographic Info

Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

Volume (Year): 48 (2013)
Issue (Month): 2 ()
Pages: 404-434

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Handle: RePEc:uwp:jhriss:v:48:y:2013:ii:1:p:404-434

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  1. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-in-Differences Estimates?," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 119(1), pages 249-275, February.
  2. Shelly Lundberg & Elaina Rose, 1998. "The Determinants of Specialization Within Marriage," Discussion Papers in Economics at the University of Washington, Department of Economics at the University of Washington 0048, Department of Economics at the University of Washington.
  3. Joseph Lupton & James P. Smith, 1999. "Marriage, Assets, and Savings," Working Papers, RAND Corporation Publications Department 99-12, RAND Corporation Publications Department.
  4. Martin Browning & Annamaria Lusardi, 1995. "Household Saving: Micro Theories and Micro Facts," Department of Economics Working Papers 1995-02, McMaster University.
  5. Betsey Stevenson, 2006. "The impact of divorce laws on marriage-specific capital," Working Paper Series, Federal Reserve Bank of San Francisco 2006-43, Federal Reserve Bank of San Francisco.
  6. Saku Aura, 2003. "Uncommitted Couples: Some Efficiency and Policy Implications of Marital Bargaining," Microeconomics, EconWPA 0304002, EconWPA.
  7. Libertad González & Tarja K. Viitanen, 2006. "The Effect of Divorce Laws on Divorce Rates in Europe," Working Papers, The University of Sheffield, Department of Economics 2006003, The University of Sheffield, Department of Economics, revised Mar 2006.
  8. Papps, Kerry L., 2006. "The Effects of Divorce Risk on the Labour Supply of Married Couples," IZA Discussion Papers 2395, Institute for the Study of Labor (IZA).
  9. Lommerud, K.E., 1988. "Marital Division Of Labor With Risk Of Divorce: The Role Of Enforcement Of Contracts," Papers, Norwegian School of Economics and Business Administration- 09-88, Norwegian School of Economics and Business Administration-.
  10. Luis Cubeddu & Jose-Victor Rios-Rull, 1997. "Marital risk and capital accumulation," Staff Report, Federal Reserve Bank of Minneapolis 235, Federal Reserve Bank of Minneapolis.
  11. Johnson, William R & Skinner, Jonathan, 1986. "Labor Supply and Marital Separation," American Economic Review, American Economic Association, American Economic Association, vol. 76(3), pages 455-69, June.
  12. Betsey Stevenson, 2008. "Divorce Law and Women's Labor Supply," NBER Working Papers 14346, National Bureau of Economic Research, Inc.
  13. Laurence R. Iannaccone, 1998. "Introduction to the Economics of Religion," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 36(3), pages 1465-1495, September.
  14. Laurence R. Iannaccone, 1998. "Corrigenda [Introduction to the Economics of Religion]," Journal of Economic Literature, American Economic Association, American Economic Association, vol. 36(4), pages 1941-1941, December.
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Cited by:
  1. Cremer, Helmuth & Pestieau, Pierre & Roeder, Kerstin, 2012. "United but (Un-)Equal: Human Capital, Probability of Divorce and the Marriage Contract," IZA Discussion Papers 7038, Institute for the Study of Labor (IZA).
  2. Olivier Bargain & Libertad González & Claire Keane & Berkay Özcan, 2010. "Female Labor Supply and Divorce: New Evidence from Ireland," Working Papers, School Of Economics, University College Dublin 201031, School Of Economics, University College Dublin.
  3. Hans Fehr & Manuel Kallweit & Fabian Kindermann, 2009. "Marital Risk, Family Insurance, and Public Policy," SOEPpapers on Multidisciplinary Panel Data Research, DIW Berlin, The German Socio-Economic Panel (SOEP) 226, DIW Berlin, The German Socio-Economic Panel (SOEP).
  4. Salvador Ortigueira & Nawid Siassi, 2010. "How important is Intra-household Risk Sharing for Savings and Labor Supply?," Economics Working Papers, European University Institute ECO2010/36, European University Institute.
  5. Alessandra Voena, 2010. "Yours, Mine and Ours: Do Divorce Laws affect the Intertemporal Behavior of Married Couples??," 2010 Meeting Papers, Society for Economic Dynamics 1329, Society for Economic Dynamics.
  6. Libertad Gonzalez & Tarja Viitanen, 2009. "The Long Term Effects of Legalizing Divorce on Children," Working Papers, University of Otago, Department of Economics 0901, University of Otago, Department of Economics, revised Jan 2009.
  7. Alessandra Voena, 2011. "Yours, Mine and Ours: Do Divorce Laws Affect the Intertemporal Behavior of Married Couples?," Discussion Papers, Stanford Institute for Economic Policy Research 10-022, Stanford Institute for Economic Policy Research.
  8. Filippo Pericoli & Luigi Ventura, 2012. "Family dissolution and precautionary savings: an empirical analysis," Review of Economics of the Household, Springer, Springer, vol. 10(4), pages 573-595, December.

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