Are Working Women Good for Marriage?

Divorce rates in the U.S. have been falling for the past decade, while female labor force participation rates have been rising. Aggregate data for US states show that in 2000, divorce rates across states are negatively correlated with female labor force participation rates, even after controlling for the variation in the average age of marriage. We connect these two trends in a simple random matching model which starts from the observation that a working woman, because she is paid in cash, has greater flexibility to transfer surplus to her husband than a non-working woman. Under unilateral divorce law, this implies that a marriage with two working partners is more stable with respect to outside offers than a marriage with only one working partner: marriages between working partners break up only if it is effcient to do so, while marriages between a working and nonworking spouse may break up ineffciently. We show that in aggregate there is a predicted inverted U relationship between the divorce rate and fraction of working women.