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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. Joseph Lupton & James P. Smith, 1999. "Marriage, Assets, and Savings," Working Papers 99-12, RAND Corporation Publications Department.
  2. 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.
  3. 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.
  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. Saku Aura, 2002. "Uncommitted Couples: Some Efficiency and Policy Implications of Marital Bargaining," CESifo Working Paper Series 801, CESifo Group Munich.
  6. Shelly Lundberg & Elaina Rose, 1999. "The Determinants of Specialization within Marriage," Working Papers UWEC-2005-07, University of Washington, Department of Economics.
  7. Betsey Stevenson, 2008. "Divorce Law and Women's Labor Supply," NBER Working Papers 14346, National Bureau of Economic Research, Inc.
  8. Martin Browning & Annamaria Lusardi, 1996. "Household Saving: Micro Theories and Micro Facts," Journal of Economic Literature, American Economic Association, vol. 34(4), pages 1797-1855, December.
  9. 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.
  10. Laurence R. Iannaccone, 1998. "Introduction to the Economics of Religion," Journal of Economic Literature, American Economic Association, vol. 36(3), pages 1465-1495, September.
  11. Johnson, William R & Skinner, Jonathan, 1986. "Labor Supply and Marital Separation," American Economic Review, American Economic Association, vol. 76(3), pages 455-69, June.
  12. 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.
  13. 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).
  14. Luis Cubeddu & Jose-Victor Rios-Rull, 1997. "Marital risk and capital accumulation," Staff Report 235, Federal Reserve Bank of Minneapolis.
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