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Breaking Up is Hard to Do: The Economics of Spousal Support

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  • Samuel A. Rea, Jr.

Abstract

The introduction of "no-fault" divorce in most of North America has eliminated the traditional basis for spousal support without providing a satisfactory alternative. Women who have reduced their labor force participation to look after a home and raise children are particularly disadvantaged by divorce. Recent cases and legal scholarship have attempted to find ways of recognizing the investment that a woman has made in the family and in her husband's career. In a recent case, Elliot v. Elliot, an Ontario court awarded the woman half of the difference between her earnings had she not married and her earnings after the divorce. A logical extension of the case would also award her half of any increase in his earnings resulting from the marriage. The model developed in this paper highlights the changes in earnings that result from specialization in housework or market work, investment in children, and investment in the spouse's human capital. The efficiency of marriage matches and divorce are also analyzed. Many alternative concepts of spousal support are presented within the framework of the model, and the incentive effects on human capital, marriage, and divorce are considered. Although no measure is perfect, the paper concludes that the approach taken in Elliot, adjusted for additional leisure enjoyed during marriage, offers a reasonable compromise between competing objectives. Property division is also considered within the same framework.

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File URL: http://www.economics.utoronto.ca/public/workingPapers/UT-ECIPA-REAS-95-01.pdf
File Function: MainText
Download Restriction: no

Bibliographic Info

Paper provided by University of Toronto, Department of Economics in its series Working Papers with number reas-95-01.

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Length: 31 pages
Date of creation: 20 Jan 1995
Date of revision:
Handle: RePEc:tor:tecipa:reas-95-01

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  1. Lundberg, S. & Pollak, R.A., 1991. "Separate Spheres Bargaining and the Marriage Market," Discussion Papers in Economics at the University of Washington 91-08, Department of Economics at the University of Washington.
  2. Sheila Eastman, 1992. "Improving Outcomes for Divorced Women," Canadian Public Policy, University of Toronto Press, vol. 18(3), pages 318-326, September.
  3. Zelder, Martin, 1993. "Inefficient Dissolutions as a Consequence of Public Goods: The Case of No-Fault Divorce," The Journal of Legal Studies, University of Chicago Press, vol. 22(2), pages 503-20, June.
  4. Weiss, Y. & Willis, R.J., 1990. "Transfers Among Divorced Couples: Evidence And Interpretation," University of Chicago - Economics Research Center 90-4, Chicago - Economics Research Center.
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  8. Mincer, Jacob & Polachek, Solomon, 1974. "Family Investment in Human Capital: Earnings of Women," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages S76-S108, Part II, .
  9. 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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  12. Borenstein, Severin & Cournat, Paul N, 1989. "How to Carve a Medical Degree: Human Capital Assets in Divorce Settlements," American Economic Review, American Economic Association, vol. 79(5), pages 992-1009, December.
  13. 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.
  14. David Lam, 1988. "Marriage Markets and Assortative Mating with Household Public Goods: Theoretical Results and Empirical Implications," Journal of Human Resources, University of Wisconsin Press, vol. 23(4), pages 462-487.
  15. Allen, Douglas W., 1990. "An inquiry into the state's role in marriage," Journal of Economic Behavior & Organization, Elsevier, vol. 13(2), pages 171-191, March.
  16. Daniel, K., 1991. "Does Marriage Make Men More Productive?," University of Chicago - Economics Research Center 92-2, Chicago - Economics Research Center.
  17. Fethke, Carol C, 1984. "An Economic Model of Asset Division in the Dissolution of Marriage," American Economic Review, American Economic Association, vol. 74(2), pages 265-70, May.
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