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Costly Divorce and Marriage Rates

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  • Yurko, Anna

Abstract

This paper develops a model of choice between marriage and cohabitation to study the effect of divorce costs on marriage decision. The paired agents are heterogeneous, the utility is non-transferable, and break up and divorce decisions are modeled explicitly as unilateral, that is, it takes the decision of only one partner to terminate a relationship. This framework is empirically relevant, since unilateral divorce is legal in many countries, and multiple empirical studies of the effect of changes in divorce laws on divorce rates demonstrate that Coase theorem does not hold (partners cannot bargain efficiently). The model seeks to reconcile the conflicting empirical evidence on the relationship between marriage rates and divorce costs.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 37810.

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Date of creation: 01 Feb 2012
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Handle: RePEc:pra:mprapa:37810

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Keywords: family economics; marriage; cohabitation; divorce; externalities;

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  1. Stevenson, Betsey & Wolfers, Justin, 2007. "Marriage and Divorce: Changes and their Driving Forces," CEPR Discussion Papers 6144, C.E.P.R. Discussion Papers.
  2. Gonzalez, Libertad & Viitanen, Tarja, 2006. "The Effect of Divorce Laws on Divorce Rates in Europe," IZA Discussion Papers 2023, Institute for the Study of Labor (IZA).
  3. 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.
  4. Steven Stern & Michael J. Brien & Lee A. Lillard, 1999. "Cohabitation, Marriage, and Divorce in a Model of Match Quality," Virginia Economics Online Papers 322, University of Virginia, Department of Economics.
  5. Fella, Giulio & Manzini, Paola & Mariotti, Marco, 2002. "Does Divorce Law Matter?," IZA Discussion Papers 439, Institute for the Study of Labor (IZA).
  6. Wolfers, Justin, 2003. "Did Unilateral Divorce Laws Raise Divorce Rates? A Reconciliation and New Results," Research Papers 1819, Stanford University, Graduate School of Business.
  7. Leora Friedberg, 1998. "Did Unilateral Divorce Raise Divorce Rates? Evidence from Panel Data," NBER Working Papers 6398, National Bureau of Economic Research, Inc.
  8. 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.
  9. Imran Rasul, 2006. "Marriage Markets and Divorce Laws," Journal of Law, Economics and Organization, Oxford University Press, vol. 22(1), pages 30-69, April.
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