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The Risk of Divorce and Household Saving Behavior

  • Libertad González
  • Berkay Özcan

We analyze the causal impact of an increase in the risk of marital dissolution on the saving behavior of married couples. We use the legalization of divorce in Ireland in 1996 as an exogenous shock to the risk of divorce. We propose several comparison groups (unaffected by the law change) that allow us to use a difference-in-differences approach. Our findings suggest that the legalization of divorce led to a significant increase in the propensity to save by married individuals, which is consistent with individuals saving more as a response to the increase in the probability of marital breakup.

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File URL: http://jhr.uwpress.org/cgi/reprint/48/2/404
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Article provided by University of Wisconsin Press in its journal Journal of Human Resources.

Volume (Year): 48 (2013)
Issue (Month): 2 ()
Pages: 404-434

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Handle: RePEc:uwp:jhriss:v:48:y:2013:ii:1:p:404-434
Contact details of provider: Web page: http://jhr.uwpress.org/

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  1. Betsey Stevenson, 2007. "The Impact of Divorce Laws on Marriage-Specific Capital," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 75-94.
  2. Saku Aura, 2002. "Uncommitted Couples: Some Efficiency and Policy Implications of Marital Bargaining," CESifo Working Paper Series 801, CESifo Group Munich.
  3. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2002. "How Much Should We Trust Differences-in-Differences Estimates?," NBER Working Papers 8841, National Bureau of Economic Research, Inc.
  4. Laurence R. Iannaccone, 1998. "Corrigenda [Introduction to the Economics of Religion]," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 1941-1941, December.
  5. Lupton, J. & Smith, J.P., 1999. "Marriage, Assets, and Savings," Papers 99-12, RAND - Labor and Population Program.
  6. 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).
  7. Papps, Kerry L., 2006. "The Effects of Divorce Risk on the Labour Supply of Married Couples," IZA Discussion Papers 2395, Institute for the Study of Labor (IZA).
  8. Bargain, Olivier & Gonzalez, Libertad & Keane, Claire & Özcan, Berkay, 2010. "Female Labor Supply and Divorce: New Evidence from Ireland," IZA Discussion Papers 4959, Institute for the Study of Labor (IZA).
  9. Shelly Lundberg & Elaina Rose, 1998. "The Determinants of Specialization Within Marriage," Working Papers 0048, University of Washington, Department of Economics.
  10. Lommerud, Kjell Erik, 1989. "Marital Division of Labor with Risk of Divorce: The Role of "Voice" Enforcement of Contracts," Journal of Labor Economics, University of Chicago Press, vol. 7(1), pages 113-27, January.
  11. Browning, Martin, 2000. " The Saving Behaviour of a Two-Person Household," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(2), pages 235-51, June.
  12. Luis Cubeddu & Jose-Victor Rios-Rull, 1997. "Marital risk and capital accumulation," Staff Report 235, Federal Reserve Bank of Minneapolis.
  13. Laurence R. Iannaccone, 1998. "Introduction to the Economics of Religion," Journal of Economic Literature, American Economic Association, vol. 36(3), pages 1465-1495, September.
  14. Johnson, William R & Skinner, Jonathan, 1986. "Labor Supply and Marital Separation," American Economic Review, American Economic Association, vol. 76(3), pages 455-69, June.
  15. Martin Browning & Annamaria Lusardi, 1996. "Household Saving: Micro Theories and Micro Facts," Discussion Papers 96-01, University of Copenhagen. Department of Economics.
  16. Betsey Stevenson, 2008. "Divorce Law and Women's Labor Supply," NBER Working Papers 14346, National Bureau of Economic Research, Inc.
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