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Divorce Law Reforms And Divorce Rates In The Usa: An Interactive Fixed‐Effects Approach

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  • Dukpa Kim
  • Tatsushi Oka

Abstract

SUMMARY This paper estimates the effects of unilateral divorce laws on divorce rates in the USA from a panel of state‐level divorce rates. We use the interactive fixed‐effects model to address the issue of endogeneity due to the association between cross‐state unobserved heterogeneity and divorce law reforms. We document that earlier studies in the literature do not fully control for unobserved heterogeneity and result in mixed empirical evidence on the effects of divorce law reforms. While reconciling these conflicting results, our results suggest that divorce law reforms have temporal positive effects on divorce rates, thus confirming the 2006 findings of Wolfers. Via simulation experiments, we assess the degree to which faulty inclusion or faulty exclusion of interactive fixed effects affects the policy effect estimators. Our results suggest that faulty inclusion only results in efficiency loss whereas faulty exclusion causes bias. Copyright © 2013 John Wiley & Sons, Ltd.

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  • Dukpa Kim & Tatsushi Oka, 2014. "Divorce Law Reforms And Divorce Rates In The Usa: An Interactive Fixed‐Effects Approach," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 29(2), pages 231-245, March.
  • Handle: RePEc:wly:japmet:v:29:y:2014:i:2:p:231-245
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    Cited by:

    1. Yi‐Ting Chen, 2020. "A distributional synthetic control method for policy evaluation," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 35(5), pages 505-525, August.
    2. Laurent Gobillon & Thierry Magnac, 2016. "Regional Policy Evaluation: Interactive Fixed Effects and Synthetic Controls," The Review of Economics and Statistics, MIT Press, vol. 98(3), pages 535-551, July.
    3. Susan Athey & Mohsen Bayati & Nikolay Doudchenko & Guido Imbens & Khashayar Khosravi, 2017. "Matrix Completion Methods for Causal Panel Data Models," Papers 1710.10251, arXiv.org, revised Jun 2020.
    4. Edith Aguirre, 2019. "Do changes in divorce legislation have an impact on divorce rates? The case of unilateral divorce in Mexico," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 28(1), pages 1-24, December.
    5. Hyungsik Roger Moon & Martin Weidner, 2015. "Linear Regression for Panel With Unknown Number of Factors as Interactive Fixed Effects," Econometrica, Econometric Society, vol. 83(4), pages 1543-1579, July.
    6. Iv'an Fern'andez-Val & Hugo Freeman & Martin Weidner, 2020. "Low-Rank Approximations of Nonseparable Panel Models," Papers 2010.12439, arXiv.org.
    7. Laurent Gobillon & Thierry Magnac, 2016. "Regional Policy Evaluation: Interactive Fixed Effects and Synthetic Controls," The Review of Economics and Statistics, MIT Press, vol. 98(3), pages 535-551, July.
    8. Shi, Wei & Lee, Lung-fei, 2018. "A spatial panel data model with time varying endogenous weights matrices and common factors," Regional Science and Urban Economics, Elsevier, vol. 72(C), pages 6-34.
    9. Evan Totty, 2017. "The Effect Of Minimum Wages On Employment: A Factor Model Approach," Economic Inquiry, Western Economic Association International, vol. 55(4), pages 1712-1737, October.
    10. Chigavazira, Abraham & Fisher, Hayley & Robinson, Tim & Zhu, Anna, 2019. "The Consequences of Extending Equitable Property Division Divorce Laws to Cohabitants," IZA Discussion Papers 12102, Institute of Labor Economics (IZA).
    11. Rafaty, R. & Dolphin, G. & Pretis, F., 2020. "Carbon pricing and the elasticity of CO2 emissions," Cambridge Working Papers in Economics 20116, Faculty of Economics, University of Cambridge.
    12. Gagliardi, Luisa, 2019. "The impact of foreign technological innovation on domestic employment via the industry mix," Research Policy, Elsevier, vol. 48(6), pages 1523-1533.
    13. Wei Shi & Lung-fei Lee, 2018. "The effects of gun control on crimes: a spatial interactive fixed effects approach," Empirical Economics, Springer, vol. 55(1), pages 233-263, August.
    14. Victor Chernozhukov & Kaspar Wüthrich & Yinchu Zhu, 2019. "Inference on average treatment effects in aggregate panel data settings," CeMMAP working papers CWP32/19, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    15. Laurent Gobillon & Thierry Magnac, 2016. "Regional Policy Evaluation: Interactive Fixed Effects and Synthetic Controls," The Review of Economics and Statistics, MIT Press, vol. 98(3), pages 535-551, July.
    16. Shen, Danqing, 2018. "Marriage, Divorce and Sorting: A Reassessment of Unilateral Divorce Laws," MPRA Paper 92848, University Library of Munich, Germany.
    17. Shinya Fukui, 2020. "The effect of deregulation of the "Act concerning the Industry Restriction"," Discussion Papers 2002, Graduate School of Economics, Kobe University.
    18. Victor Chernozhukov & Kaspar Wüthrich & Yu Zhu, 2017. "An exact and robust conformal inference method for counterfactual and synthetic controls," CeMMAP working papers CWP62/17, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    19. Victor Chernozhukov & Kaspar Wuthrich & Yinchu Zhu, 2018. "Practical and robust $t$-test based inference for synthetic control and related methods," Papers 1812.10820, arXiv.org, revised Mar 2020.
    20. Feng, Qu, 2020. "Common factors and common breaks in panels: An empirical investigation," Economics Letters, Elsevier, vol. 187(C).
    21. Bai, Jushan & Liao, Yuan, 2017. "Inferences in panel data with interactive effects using large covariance matrices," Journal of Econometrics, Elsevier, vol. 200(1), pages 59-78.

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