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Divorce Property Division and the Decision to Marry or Cohabit

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  • Fisher, H.

Abstract

This paper presents a model of the choice between marriage and cohabitation for a couple who have decided to form a relationship. The model is used to analyse the implications of changing from a title based division of property on divorce to an equal sharing regime. There are two opposing effects. In line with popular expectations, the change to an equal sharing regime prevents some wealthy individuals from marrying since they risk losing half of their assets in the event of divorce. Offsetting this, the equal sharing property division regime enables cooperative investments to be made in marriage, and so increases the value of marriage relative to cohabitation for some couples. Overall the impact on the marriage rate is ambiguous, although the rate is most likely to increase where it is more difficult to make cooperative investments due to unilateral divorce laws, and where couples are more similar to each other, reducing their cost of divorce.

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File URL: http://www.econ.cam.ac.uk/research/repec/cam/pdf/cwpe1101.pdf
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Bibliographic Info

Paper provided by Faculty of Economics, University of Cambridge in its series Cambridge Working Papers in Economics with number 1101.

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Date of creation: 18 Jan 2011
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Handle: RePEc:cam:camdae:1101

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Web page: http://www.econ.cam.ac.uk/index.htm

Related research

Keywords: Multisectors; Technology shocks; Business cycles; Long-run restrictions; Cross Sectional Dependence;

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  1. Helmut Rainer, 2003. "Should We Write Prenuptial Contracts?," Economics Discussion Papers 572, University of Essex, Department of Economics.
  2. Clark, Simon, 1999. "Law, Property, and Marital Dissolution," Economic Journal, Royal Economic Society, vol. 109(454), pages C41-54, March.
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  4. Langlais, Eric, 2009. "On unilateral divorce and the "selection of marriages" hypothesis," MPRA Paper 14368, University Library of Munich, Germany.
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  13. Vicky Barham & Rose Anne Devlin & Jie Yang, 2006. "Public Policies and Private Decisions: The Effect of Child Support Measures on Marriage and Divorce," The Journal of Legal Studies, University of Chicago Press, vol. 35(2), pages 441-474, 06.
  14. Martin Halla, 2009. "The Effect of Joint Custody on Marriage and Divorce," NRN working papers 2009-09, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  15. Greg J. Duncan & Saul D. Hoffman, 1985. "Economic Consequences of Marital Instability," NBER Chapters, in: Horizontal Equity, Uncertainty, and Economic Well-Being, pages 427-470 National Bureau of Economic Research, Inc.
  16. Niko Matouschek & Imran Rasul, 2008. "The Economics of the Marriage Contract: Theories and Evidence," Journal of Law and Economics, University of Chicago Press, vol. 51(1), pages 59-110, 02.
  17. Imran Rasul, 2006. "Marriage Markets and Divorce Laws," Journal of Law, Economics and Organization, Oxford University Press, vol. 22(1), pages 30-69, April.
  18. Smith, Ian, 1997. "Explaining the Growth of Divorce in Great Britain," Scottish Journal of Political Economy, Scottish Economic Society, vol. 44(5), pages 519-44, November.
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