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

This paper examines how divorce laws affect couples’ intertemporal choices and wellbeing. Exploiting panel variation in U.S. laws, I estimate the parameters of a model of household decision making. Household survey data indicate that the introduction of unilateral divorce in states that imposed an equal division of property is associated with higher household savings and lower female employment, implying a distortion in household assets accumulation and a transfer towards wives whose share in household resources is smaller than the one of their husband. When spouses share consumption equally, separate property or prenuptial agreements can reduce distortions and increase equity. ∗Department of Economics, The University of Chicago. Email: avoena@uchicago.edu. I thank my adviser Luigi Pistaferri and Michèle Tertilt as well as Caroline Hoxby, Petra Moser and Monika Piazzesi for their outstanding guidance as part of my dissertation committee at Stanford University. I am also grateful to Ran Abramitzky, Stefania Albanesi, Rick Banks, Maristella Botticini, Giacomo De Giorgi, Paula England, Max Floetotto, Seema Jayachandran, Hamish Low, Aprajit Mahajan, Neale Mahoney, Ellen McGrattan, Costas Meghir, Andrea Pozzi, Victor Rios-Rull, Martin Schneider, Brett Turner as well as participants in seminars and conferences. I owe special thanks to Elizabeth Powers and Jeffrey Gray, who provided critical data. I acknowledge the financial support of the Leonard W. Ely & Shirley R. Ely Graduate Student Fellowship through a grant to SIEPR and the Michelle R. Clayman Institute for Gender Studies Graduate Dissertation Fellowship.