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Divorce Laws and Divorce Rate in the U.S

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  • Stefania Marcassa

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    (Paris School of Economics)

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    Abstract

    At the end of the 1960s, the U.S. divorce laws underwent major changes and the divorce rate more than doubled in all of the states. The new laws introduced unilateral divorce in most of the states and changes in divorce settlements in every state, such as property division, alimony transfers, and child custody assignments. The empirical literature so far has focused on the switch from consensual to unilateral divorce and found that this change cannot fully account for the increase in the divorce rate. Also, the divorce rate increased even in states where the decision remained consensual. In this paper, I consider the effects of other aspects of the legal change. I show that changes in divorce settlements provide economic incentives for both spouses to agree to divorce. Moreover, I describe a mechanism that can explain the different change in divorce rate by age of couples. I solve and calibrate a model where agents differ by gender, and make decisions on their marital status, investment and labor supply. Under the new financial settlements, divorced men gain from a favorable division of property, while women gain from an increase in alimony and child support transfers. Since both of them are better off in the new divorce setting, the existing requirement of consent for divorce (consensual or unilateral) is no longer relevant. Results show that changes in divorce settlements account for a substantial amount of the increase in the aggregate divorce rate. I also find that the increase in divorce rate of young couples with children contributes the most to the overall increase, which is consistent with the data.

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    File URL: http://humcap.uchicago.edu/RePEc/hka/wpaper/Marcassa_2011_divorce-law-rate.pdf
    File Function: First version, March 2, 2011
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    Bibliographic Info

    Paper provided by Human Capital and Economic Opportunity Working Group in its series Working Papers with number 2011-009.

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    Date of creation: Mar 2011
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    Handle: RePEc:hka:wpaper:2011-009

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    Keywords: Age-specific divorce rate; unilateral and consensual divorce; divorce laws; property division; alimony and child support; child custody;

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    1. Richard Blundell & Pierre-Andre Chiappori & Thierry Magnac & Costas Meghir, 2007. "Collective Labour Supply: Heterogeneity and Non-Participation," Review of Economic Studies, Oxford University Press, vol. 74(2), pages 417-445.
    2. Urvi Neelakantan, 2009. "The impact of changes in child support policy," Journal of Population Economics, Springer, vol. 22(3), pages 641-663, July.
    3. Leora Friedberg, 1998. "Did Unilateral Divorce Raise Divorce Rates? Evidence from Panel Data," NBER Working Papers 6398, National Bureau of Economic Research, Inc.
    4. Justin Wolfers, 2006. "Did Unilateral Divorce Laws Raise Divorce Rates? A Reconciliation and New Results," American Economic Review, American Economic Association, vol. 96(5), pages 1802-1820, December.
    5. S. Rao Aiyagari & Jeremy Greenwood & Nezih Guner, 2000. "On the State of the Union," Journal of Political Economy, University of Chicago Press, vol. 108(2), pages 213-244, April.
    6. Libertad González & Tarja K. Viitanen, 2006. "The Effect of Divorce Laws on Divorce Rates in Europe," Working Papers 2006003, The University of Sheffield, Department of Economics, revised Mar 2006.
    7. Imran Rasul, 2006. "Marriage Markets and Divorce Laws," Journal of Law, Economics and Organization, Oxford University Press, vol. 22(1), pages 30-69, April.
    8. Eric Langlais,, 2010. "On unilateral divorce and the “selection of marriages” hypothesis," Recherches économiques de Louvain, De Boeck Université, vol. 76(3), pages 229-256.
    9. Peters, H Elizabeth, 1992. "Marriage and Divorce: Reply," American Economic Review, American Economic Association, vol. 82(3), pages 687-93, June.
    10. Peters, H Elizabeth, 1986. "Marriage and Divorce: Informational Constraints and Private Contracting," American Economic Review, American Economic Association, vol. 76(3), pages 437-54, June.
    11. Tauchen, George, 1986. "Finite state markov-chain approximations to univariate and vector autoregressions," Economics Letters, Elsevier, vol. 20(2), pages 177-181.
    12. Simon Clark, 2004. "Law, Property, and Marital Dissolution," ESE Discussion Papers 32, Edinburgh School of Economics, University of Edinburgh.
    13. Becker, Gary S & Landes, Elisabeth M & Michael, Robert T, 1977. "An Economic Analysis of Marital Instability," Journal of Political Economy, University of Chicago Press, vol. 85(6), pages 1141-87, December.
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