Working Paper: CEPR ID: DP10047
Authors: Raquel Fernández; Joyce Cheng Wong
Abstract: During the 1970s the US underwent an important change in its divorce laws, switching from mutual consent to a unilateral divorce regime. Who benefited and who lost from this change? To answer this question we develop a dynamic life-cycle model in which agents make consumption, saving, labor force participation (LFP), and marriage and divorce decisions subject to several shocks and given a particular divorce regime. We calibrate the model using statistics relevant to the life-cycle of the 1940 cohort. Conditioning solely on gender, our ex ante welfare analysis finds that women would fare better under mutual consent whereas men would prefer a unilateral system. Once we condition not only on gender but also on initial productivity, we find that men in the top three quintiles of the initial productivity distribution are made better off by a unilateral system as are the top two quintiles of women; the rest prefer mutual consent. We also find that although the change in divorce regime had only a small effect on the LFP of married women in the 1940 cohort, these effects would be considerably larger for a cohort who lived its entire life under a unilateral divorce system.
Keywords: divorce; gender inequality; household bargaining; lifecycle behavior
JEL Codes: D130; J12; J16; K36
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| divorce regime change (J12) | welfare outcomes for men and women (I38) |
| mutual consent regime (J54) | welfare outcomes for women (I38) |
| unilateral system (P14) | welfare outcomes for men (I38) |
| unilateral system (P14) | welfare outcomes for women (I38) |
| lower quintiles (D31) | preference for mutual consent (C71) |
| divorce regime change (J12) | labor force participation of married women in 1940 cohort (J21) |
| unilateral divorce system (J12) | labor force participation of married women (D13) |
| frequency of divorce (J12) | relative welfare when divorced (J12) |
| relative welfare when divorced (J12) | marriage patterns and labor supply decisions (J12) |