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The impact of divorce laws on marriage-specific capital

  • Betsey Stevenson

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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Paper provided by Federal Reserve Bank of San Francisco in its series Working Paper Series with number 2006-43.

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Date of creation: 2006
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Handle: RePEc:fip:fedfwp:2006-43
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