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Changing the Rules Midway: The Impact of Granting Alimony Rights on Existing and Newly-Formed Partnerships

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Listed:
  • Jeanne Lafortune
  • Pierre-Andre Chiappori
  • Murat Iyigun
  • Yoram Weiss

Abstract

The paper analyzes the effect of a reform granting alimony rights to cohabiting couples in Canada, exploiting the fact that each province extended these rights in different years and required different cohabitation length. A theoretical analysis, based on a collective household model with a matching framework, predicts that changes in alimony laws would affect existing couples and couples to-be differently. For existing couples, legislative changes aimed at favoring (wo)men do benefit them, especially if the match quality is low. However, for couples not yet formed, they generate offsetting intra-household transfers (in our model, of leisure) and lower intra-marital allocations for the spouses who are the intended beneficiary. Our empirical analysis confirms these predictions. Among cohabiting couples united long enough before the reform, obtaining the right to petition for alimony led women to lower their labor force participation. These results, however, do not hold | and, in some cases, are reversed for newly formed cohabiting couples.

Suggested Citation

  • Jeanne Lafortune & Pierre-Andre Chiappori & Murat Iyigun & Yoram Weiss, 2012. "Changing the Rules Midway: The Impact of Granting Alimony Rights on Existing and Newly-Formed Partnerships," Documentos de Trabajo 424, Instituto de Economia. Pontificia Universidad Católica de Chile..
  • Handle: RePEc:ioe:doctra:424
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    References listed on IDEAS

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    1. Ethan Ligon & Jonathan P. Thomas & Tim Worrall, 2002. "Informal Insurance Arrangements with Limited Commitment: Theory and Evidence from Village Economies," Review of Economic Studies, Oxford University Press, vol. 69(1), pages 209-244.
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    5. Chiappori, Pierre-André & Iyigun, Murat & Weiss, Yoram, 2008. "An Assignment Model with Divorce and Remarriage," IZA Discussion Papers 3892, Institute of Labor Economics (IZA).
    6. Chiappori, Pierre-André & Iyigun, Murat & Weiss, Yoram, 2007. "Public Goods, Transferable Utility and Divorce Laws," IZA Discussion Papers 2646, Institute of Labor Economics (IZA).
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    Citations

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    Cited by:

    1. Bredtmann, Julia & Vonnahme, Christina, 2017. "Less Alimony after Divorce: Spouses' Behavioral Response to the 2008 Alimony Reform in Germany," IZA Discussion Papers 10864, Institute of Labor Economics (IZA).
    2. Laurens Cherchye & Thomas Demuynck & Bram De Rock & Frederic Vermeulen, 2017. "Household Consumption When the Marriage Is Stable," American Economic Review, American Economic Association, vol. 107(6), pages 1507-1534, June.
    3. Sun, Ang & Zhao, Yaohui, 2016. "Divorce, abortion, and the child sex ratio: The impact of divorce reform in China," Journal of Development Economics, Elsevier, vol. 120(C), pages 53-69.
    4. René Böheim & Mario Francesconi & Martin Halla, 2012. "Does custody law affect family behavior in and out of marriage?," Economics working papers 2012-12, Department of Economics, Johannes Kepler University Linz, Austria.
    5. Sun, Ang & Zhang, Qinghua, 2020. "Who marries whom in a surging housing market?☆," Journal of Development Economics, Elsevier, vol. 146(C).
    6. Jeanne Lafortune & Corinne Low, 2020. "Collateralized Marriage," NBER Working Papers 27210, National Bureau of Economic Research, Inc.
    7. Sun, Ang & Zhao, Yaohui, 2014. "Divorce, Abortion and Children's Sex Ratio: The Impact of Divorce Reform in China," IZA Discussion Papers 8230, Institute of Labor Economics (IZA).
    8. Marcos A. Rangel & Duncan Thomas, 2019. "Decision-Making in Complex Households," Working Papers 2019-070, Human Capital and Economic Opportunity Working Group.
    9. Han, Li & Shi, Xinzheng, 2019. "How does intergenerational investment respond to changes in the marriage market? Evidence from China," Journal of Development Economics, Elsevier, vol. 139(C), pages 109-121.
    10. Petra Persson, 2020. "Social Insurance and the Marriage Market," Journal of Political Economy, University of Chicago Press, vol. 128(1), pages 252-300.
    11. repec:esx:essedp:724 is not listed on IDEAS
    12. Marcos Rangel & Duncan Thomas, 2019. "Decision-Making in Complex Households," NBER Working Papers 26511, National Bureau of Economic Research, Inc.
    13. Fabio Blasutto & Egor Kozlov, 2020. "(Changing) Marriage and Cohabitation Patterns in the US: do Divorce Laws Matter?," 2020 Papers pbl245, Job Market Papers.
    14. Rangel, Marcos & Thomas, Duncan, 2020. "Decision-Making in Complex Households," CEPR Discussion Papers 14278, C.E.P.R. Discussion Papers.
    15. Julia Bredtmann & Christina Vonnahme, 2019. "Less money after divorce – how the 2008 alimony reform in Germany affected spouses’ labor supply, leisure and marital stability," Review of Economics of the Household, Springer, vol. 17(4), pages 1191-1223, December.

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    More about this item

    Keywords

    Alimony; Cohabitation; Bargaining; Policy neutrality; Labor supply;
    All these keywords.

    JEL classification:

    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • K36 - Law and Economics - - Other Substantive Areas of Law - - - Family and Personal Law

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