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Yours, Mine and Ours: Do Divorce Laws affect the Intertemporal Behavior of Married Couples??

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  • Alessandra Voena

    (Stanford University)

Abstract

Divorce laws establish spouses' individual property rights over household resources and determine when divorce is allowed. This paper examines how such laws influence the intertemporal behavior and the welfare of U.S. married couples. I build a model of household choice about consumption, labor supply and divorce under multiple divorce law regimes and I estimate it using exogenous variation in U.S. divorce laws from the 1970s to the 1990s. Couples responded to equal division of property and unilateral divorce by increasing tangible assets up to 19%, which suggests the presence of a strong income effect for the primary earner, and by reducing female employment by over 5 percentage points, because the threat of divorce granted additional bargaining power to married woman. The bargaining weight of women implied by these responses in the model corresponds to a third of the weight of men. This indicates that equal division of assets benefited women when it was first introduced, as they has such low weight in marriage decision. However, counterfactual experiments show that equal division may be potentially detrimental to women as they gain equality in their marriage. When men and women have the same bargaining weight, women are better off in a separate property regime, as they may need more assets than their husband to smooth consumption when going into a divorce.

Suggested Citation

  • Alessandra Voena, 2010. "Yours, Mine and Ours: Do Divorce Laws affect the Intertemporal Behavior of Married Couples??," 2010 Meeting Papers 1329, Society for Economic Dynamics.
  • Handle: RePEc:red:sed010:1329
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    File URL: https://economicdynamics.org/meetpapers/2010/paper_1329.pdf
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    References listed on IDEAS

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    1. Machado, Cecilia, 2012. "Selection, Heterogeneity and the Gender Wage Gap," IZA Discussion Papers 7005, Institute for the Study of Labor (IZA).
    2. Libertad González & Berkay Özcan, 2013. "The Risk of Divorce and Household Saving Behavior," Journal of Human Resources, University of Wisconsin Press, pages 404-434.
    3. Saku Aura, 2002. "Uncommitted Couples: Some Efficiency and Policy Implications of Marital Bargaining," Working Papers 0217, Department of Economics, University of Missouri.
    4. Orazio Attanasio & Hamish Low & Virginia Sánchez-Marcos, 2008. "Explaining Changes in Female Labor Supply in a Life-Cycle Model," American Economic Review, American Economic Association, pages 1517-1552.
    5. Attanasio, Orazio P & Weber, Guglielmo, 1995. "Is Consumption Growth Consistent with Intertemporal Optimization? Evidence from the Consumer Expenditure Survey," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1121-1157, December.
    6. Powers, Elizabeth T., 1998. "Does means-testing welfare discourage saving? evidence from a change in AFDC policy in the United States," Journal of Public Economics, Elsevier, pages 33-53.
    7. Goldin, Claudia, 2006. "The Quiet Revolution That Transformed Women’s Employment, Education, and Family," Scholarly Articles 2943933, Harvard University Department of Economics.
    8. François Bourguignon & Martin Browning & Pierre-André Chiappori, 2009. "Efficient Intra-Household Allocations and Distribution Factors: Implications and Identification," Review of Economic Studies, Oxford University Press, vol. 76(2), pages 503-528.
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    Cited by:

    1. Michele Tertilt & Matthias Doepke, 2010. "Does Female Empowerment Promote Economic Development?," 2010 Meeting Papers 230, Society for Economic Dynamics.
    2. Joyce Wong & Raquel Fernández, 2012. "The Disappearing Gender Gap: The impact of divorce, wages, and preferences on education and women's work," 2012 Meeting Papers 176, Society for Economic Dynamics.

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