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Female labor supply and divorce: New evidence from Ireland

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  • Bargain, Olivier
  • González, Libertad
  • Keane, Claire
  • Özcan, Berkay

Abstract

If participation in the labor market helps to secure women's outside options in the case of divorce/separation, an increase in the perceived risk of marital dissolution may accelerate the increase in female labor supply. This simple prediction has been tested in the literature using time and/or spatial variation in the US divorce legislation. In this paper, we suggest testing this hypothesis by exploiting a more radical policy change, i.e., the actual legalization of divorce. In Ireland, the right to divorce was introduced in 1996, followed by an acceleration of marriage breakdown rates. We use this fundamental change in Irish society as a natural experiment. Using families for whom the risk of marital dissolution is small as a control group, our difference-in-difference estimates suggest that the legalization of divorce contributed to a significant increase in female labor supply, occurring essentially at the extensive margin. Results are not driven by selection and are robust to numerous specification checks, including the introduction of household fixed effects and propensity score reweighting.

Suggested Citation

  • Bargain, Olivier & González, Libertad & Keane, Claire & Özcan, Berkay, 2012. "Female labor supply and divorce: New evidence from Ireland," European Economic Review, Elsevier, vol. 56(8), pages 1675-1691.
  • Handle: RePEc:eee:eecrev:v:56:y:2012:i:8:p:1675-1691
    DOI: 10.1016/j.euroecorev.2012.08.007
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    Citations

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    Cited by:

    1. Libertad González & Berkay Özcan, 2013. "The Risk of Divorce and Household Saving Behavior," Journal of Human Resources, University of Wisconsin Press, vol. 48(2), pages 404-434.
    2. Libertad Gonzalez, 2014. "Should divorce be easier or harder?," IZA World of Labor, Institute for the Study of Labor (IZA), pages 113-113, December.
    3. Alessandro Cigno, 2011. "The Economics of Marriage," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 12(s1), pages 28-41, May.
    4. repec:ucp:jlawec:doi:10.1086/692806 is not listed on IDEAS
    5. Matias Busso & Dario Romero Fonseca, 2015. "Female Labor Force Participation in Latin America: Patterns and Explanations," CEDLAS, Working Papers 0187, CEDLAS, Universidad Nacional de La Plata.
    6. Jennifer Roff, 2017. "Cleaning in the Shadow of the Law? Bargaining, Marital Investment, and the Impact of Divorce Law on Husbands' Intrahousehold Work," Journal of Law and Economics, University of Chicago Press, vol. 60(1), pages 115-134.
    7. World Bank, 2013. "Montenegro Gender Diagnostic," World Bank Other Operational Studies 21827, The World Bank.
    8. Maczulskij, Terhi & Böckerman, Petri, 2017. "Harsh Times: Do Stressors Lead to Labor Market Losses?," IZA Discussion Papers 10773, Institute for the Study of Labor (IZA).
    9. repec:aea:aecrev:v:107:y:2017:i:6:p:1611-37 is not listed on IDEAS
    10. Petter Lundborg & Erik Plug & Astrid Würtz Rasmussen, 2017. "Can Women Have Children and a Career? IV Evidence from IVF Treatments," American Economic Review, American Economic Association, vol. 107(6), pages 1611-1637, June.
    11. Lundborg, Petter & Plug, Erik & Rasmussen, Astrid Würtz, 2014. "Fertility Effects on Female Labor Supply: IV Evidence from IVF Treatments," IZA Discussion Papers 8609, Institute for the Study of Labor (IZA).
    12. Sanna Huikari & Marko Korhonen & Mikko Puhakka, 2016. "’Til booze do us part: alcohol consumption and marital dissolution," Empirical Economics, Springer, vol. 51(2), pages 831-852, September.

    More about this item

    Keywords

    Divorce law; Natural experiment; Labor supply; Fixed effects; Propensity score;

    JEL classification:

    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • D10 - Microeconomics - - Household Behavior - - - General
    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • K36 - Law and Economics - - Other Substantive Areas of Law - - - Family and Personal Law

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