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

Author

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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    File URL: http://www.economia.uc.cl/docs/dt_424.pdf
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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.
    2. Chiappori, Pierre-André & Iyigun, Murat & Weiss, Yoram, 2007. "Public Goods, Transferable Utility and Divorce Laws," IZA Discussion Papers 2646, Institute for the Study of Labor (IZA).
    3. Steve Laufer & Ahu Gemici, 2009. "Marriage and Cohabitation," 2009 Meeting Papers 1191, Society for Economic Dynamics.
    4. Maurizio Mazzocco, 2007. "Household Intertemporal Behaviour: A Collective Characterization and a Test of Commitment," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 857-895.
    5. Jeanne Lafortune, 2013. "Making Yourself Attractive: Pre-marital Investments and the Returns to Education in the Marriage Market," American Economic Journal: Applied Economics, American Economic Association, pages 151-178.
    6. Imran Rasul, 2006. "Marriage Markets and Divorce Laws," Journal of Law, Economics, and Organization, Oxford University Press, vol. 22(1), pages 30-69, April.
    7. Clark, Simon, 1999. "Law, Property, and Marital Dissolution," Economic Journal, Royal Economic Society, vol. 109(454), pages 41-54, March.
    8. Pierre-André Chiappori & Murat Iyigun & Yoram Weiss, 2008. "An Assignment Model with Divorce and Remarriage," Working Papers 2009-002, Becker Friedman Institute for Research In Economics.
    9. Steve Laufer & Ahu Gemici, 2009. "Marriage and Cohabitation," 2009 Meeting Papers 1191, Society for Economic Dynamics.
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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," Ruhr Economic Papers 702, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    2. repec:esx:essedp:724 is not listed on IDEAS
    3. 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.
    4. 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.
    5. 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.
    6. Sun, Ang & Zhao, Yaohui, 2014. "Divorce, Abortion and Children's Sex Ratio: The Impact of Divorce Reform in China," IZA Discussion Papers 8230, Institute for the Study of Labor (IZA).
    7. Laurens Cherchye & Thomas Demuynck & Bram De Rock & Frederic Vermeulen, 2014. "Household consumption when marriage is stable," IFS Working Papers W14/26, Institute for Fiscal Studies.
    8. Persson, Petra, 2015. "Social insurance and the marriage market," Working Paper Series 2015:6, IFAU - Institute for Evaluation of Labour Market and Education Policy.

    More about this item

    Keywords

    Alimony; Cohabitation; Bargaining; Policy neutrality; Labor supply;

    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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