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The impact of divorce laws on marriage-specific capital

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  • Betsey Stevenson

Abstract

This paper considers how divorce law alters the incentives for couples to invest in their marriage, focusing on the impact of unilateral divorce laws on investments in new marriages. Differences across states between 1970 and 1980 provide useful quasi-experimental variation with which to consider incentives to invest in several types of marriage-specific capital: spouse's education, children, household specialization, and home ownership. I find that adoption of unilateral divorce--regardless of the prevailing property-division laws--reduces investment in all types of marriage-specific capital considered except home ownership. In contrast, results for home ownership depend on the underlying property division laws.

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  • Betsey Stevenson, 2006. "The impact of divorce laws on marriage-specific capital," Working Paper Series 2006-43, Federal Reserve Bank of San Francisco.
  • Handle: RePEc:fip:fedfwp:2006-43
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    References listed on IDEAS

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    1. Peters, H Elizabeth, 1986. "Marriage and Divorce: Informational Constraints and Private Contracting," American Economic Review, American Economic Association, vol. 76(3), pages 437-454, June.
    2. Becker, Gary S & Landes, Elisabeth M & Michael, Robert T, 1977. "An Economic Analysis of Marital Instability," Journal of Political Economy, University of Chicago Press, vol. 85(6), pages 1141-1187, December.
    3. Betsey Stevenson & Justin Wolfers, 2006. "Bargaining in the Shadow of the Law: Divorce Laws and Family Distress," The Quarterly Journal of Economics, Oxford University Press, vol. 121(1), pages 267-288.
    4. Ellman, Ira Mark & Lohr, Sharon L., 1998. "Dissolving the relationship between divorce laws and divorce rates," International Review of Law and Economics, Elsevier, vol. 18(3), pages 341-359, September.
    5. Gray, Jeffrey S, 1998. "Divorce-Law Changes, Household Bargaining, and Married Women's Labor Supply," American Economic Review, American Economic Association, vol. 88(3), pages 628-642, June.
    6. Johnson, William R & Skinner, Jonathan, 1986. "Labor Supply and Marital Separation," American Economic Review, American Economic Association, vol. 76(3), pages 455-469, June.
    7. Imran Rasul, 2006. "Marriage Markets and Divorce Laws," Journal of Law, Economics, and Organization, Oxford University Press, vol. 22(1), pages 30-69, April.
    8. Leora Friedberg, 1998. "Did Unilateral Divorce Raise Divorce Rates? Evidence from Panel Data," NBER Working Papers 6398, National Bureau of Economic Research, Inc.
    9. Becker, Gary S, 1974. "On the Relevance of the New Economics of the Family," American Economic Review, American Economic Association, vol. 64(2), pages 317-319, May.
    10. Justin Wolfers, 2006. "Did Unilateral Divorce Laws Raise Divorce Rates? A Reconciliation and New Results," American Economic Review, American Economic Association, vol. 96(5), pages 1802-1820, December.
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