[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp3726.html
   My bibliography  Save this paper

The Risk of Divorce and Household Saving Behavior

Author

Listed:
  • González, Libertad

    (Universitat Pompeu Fabra)

  • Özcan, Berkay

    (London School of Economics)

Abstract
We analyze the impact of an increase in the risk of divorce on the saving behaviour of married couples. From a theoretical perspective, the expected sign of the effect is ambiguous. We take advantage of the legalization of divorce in Ireland in 1996 as an exogenous increase in the likelihood of marital dissolution. We analyze the saving behaviour over time of couples who were married before the law was passed. We propose a difference-in-differences approach where we use as comparison groups either married couples in other European countries (not affected by the law change), or Irish families who did not experience a significant increase in the expected risk of divorce (such as very religious families, or single individuals). Our results suggest that the increase in the risk of divorce brought about by the law was followed by an increase in the propensity to save of married couples, consistent with a rise in precautionary savings interpretation. An increase in the risk of marital dissolution of about 40 percent led to a 7 to 13 percent rise in the proportion of married couples reporting positive savings.

Suggested Citation

  • González, Libertad & Özcan, Berkay, 2008. "The Risk of Divorce and Household Saving Behavior," IZA Discussion Papers 3726, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp3726
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp3726.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Betsey Stevenson, 2007. "The Impact of Divorce Laws on Marriage-Specific Capital," Journal of Labor Economics, University of Chicago Press, vol. 25(1), pages 75-94.
    2. Luis Cubeddu & José-Víctor Ríos-Rull, 1997. "Marital risk and capital accumulation," Staff Report 235, Federal Reserve Bank of Minneapolis.
    3. Bargain, Olivier & González, Libertad & Keane, Claire & Özcan, Berkay, 2012. "Female labor supply and divorce: New evidence from Ireland," European Economic Review, Elsevier, vol. 56(8), pages 1675-1691.
    4. Grossbard,Shoshana A. (ed.), 2003. "Marriage and the Economy," Cambridge Books, Cambridge University Press, number 9780521814546, September.
    5. Martin Browning & Annamaria Lusardi, 1996. "Household Saving: Micro Theories and Micro Facts," Journal of Economic Literature, American Economic Association, vol. 34(4), pages 1797-1855, December.
    6. John Knowles & Nezih Guner, 2007. "Marital Instability and the Distribution of Wealth," 2007 Meeting Papers 785, Society for Economic Dynamics.
    7. Johnson, William R & Skinner, Jonathan, 1986. "Labor Supply and Marital Separation," American Economic Review, American Economic Association, vol. 76(3), pages 455-469, June.
    8. Laurence R. Iannaccone, 1998. "Introduction to the Economics of Religion," Journal of Economic Literature, American Economic Association, vol. 36(3), pages 1465-1495, September.
    9. Saku Aura, 2002. "Uncommitted Couples: Some Efficiency and Policy Implications of Marital Bargaining," CESifo Working Paper Series 801, CESifo.
    10. González, Libertad & Viitanen, Tarja K., 2009. "The effect of divorce laws on divorce rates in Europe," European Economic Review, Elsevier, vol. 53(2), pages 127-138, February.
    11. Papps, Kerry L., 2006. "The Effects of Divorce Risk on the Labour Supply of Married Couples," IZA Discussion Papers 2395, Institute of Labor Economics (IZA).
    12. Laurence R. Iannaccone, 1998. "Corrigenda [Introduction to the Economics of Religion]," Journal of Economic Literature, American Economic Association, vol. 36(4), pages 1941-1941, December.
    13. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    14. Lupton, J. & Smith, J.P., 1999. "Marriage, Assets, and Savings," Papers 99-12, RAND - Labor and Population Program.
    15. Shelly Lundberg & Elaina Rose, 1998. "The Determinants of Specialization Within Marriage," Working Papers 0048, University of Washington, Department of Economics.
    16. repec:bla:scandj:v:102:y:2000:i:2:p:235-51 is not listed on IDEAS
    17. Betsey Stevenson, 2008. "Divorce Law and Women's Labor Supply," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 5(4), pages 853-873, December.
    18. Grossbard,Shoshana A. (ed.), 2003. "Marriage and the Economy," Cambridge Books, Cambridge University Press, number 9780521891431, September.
    19. Justin Wolfers, 2006. "Did Unilateral Divorce Laws Raise Divorce Rates? A Reconciliation and New Results," American Economic Review, American Economic Association, vol. 96(5), pages 1802-1820, December.
    20. Lommerud, Kjell Erik, 1989. "Marital Division of Labor with Risk of Divorce: The Role of "Voice" Enforcement of Contracts," Journal of Labor Economics, University of Chicago Press, vol. 7(1), pages 113-127, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bargain, Olivier & González, Libertad & Keane, Claire & Özcan, Berkay, 2012. "Female labor supply and divorce: New evidence from Ireland," European Economic Review, Elsevier, vol. 56(8), pages 1675-1691.
    2. Marie Boltz & Isabelle Chort, 2019. "The Risk of Polygamy and Wives’ Saving Behavior," The World Bank Economic Review, World Bank, vol. 33(1), pages 209-230.
    3. Tanvi Kiran & Shivam Dhawan, 2015. "The Impact of Family Size on Savings and Consumption Expenditure of Industrial Workers: A Cross-Sectional Study," American Journal of Economics and Business Administration, Science Publications, vol. 7(4), pages 177-184, November.
    4. Alessandra Voena, 2015. "Yours, Mine, and Ours: Do Divorce Laws Affect the Intertemporal Behavior of Married Couples?," American Economic Review, American Economic Association, vol. 105(8), pages 2295-2332, August.
    5. Angelini, Viola & Bertoni, Marco & Stella, Luca & Weiss, Christoph T., 2019. "The ant or the grasshopper? The long-term consequences of Unilateral Divorce Laws on savings of European households," European Economic Review, Elsevier, vol. 119(C), pages 97-113.
    6. Jennifer Roff, 2017. "Cleaning in the Shadow of the Law? Bargaining, Marital Investment, and the Impact of Divorce Law on Husbands' Intrahousehold Work," Journal of Law and Economics, University of Chicago Press, vol. 60(1), pages 115-134.
    7. World Bank, 2013. "Montenegro Gender Diagnostic," World Bank Publications - Reports 21827, The World Bank Group.
    8. González, Libertad & Viitanen, Tarja, 2008. "The Long Term Effects of Legalizing Divorce on Children," IZA Discussion Papers 3789, Institute of Labor Economics (IZA).
    9. Yazeed Abdul Mumin & Abubakari Razak & Paul Bata Domanban, 2013. "Analysis of Household Heads? Decision-To-Save with Financial Institutions in Ghana," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 3(11), pages 1466-1478, November.
    10. Marcel Fischer & Natalia Khorunzhina, 2019. "Housing Decision With Divorce Risk," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(3), pages 1263-1290, August.
    11. Helmuth Cremer & Pierre Pestieau & Kerstin Roeder, 2015. "United but (un)equal: human capital, probability of divorce, and the marriage contract," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(1), pages 195-217, January.
    12. Hertegård, Edvin, 2024. "Divorce law reform, family stability, and children's long-term outcomes," Working Paper Series 2024:11, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    13. Susanta Kumar SETHY & Phanindra GOYARI, 2022. "Measuring financial inclusion and its present status in South Asian countries. Evidence from a multidimensional Financial Inclusion Index," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania / Editura Economica, vol. 0(3(632), A), pages 131-150, Autumn.
    14. Filippo Pericoli & Luigi Ventura, 2012. "Family dissolution and precautionary savings: an empirical analysis," Review of Economics of the Household, Springer, vol. 10(4), pages 573-595, December.
    15. Ortigueira, Salvador & Siassi, Nawid, 2013. "How important is intra-household risk sharing for savings and labor supply?," Journal of Monetary Economics, Elsevier, vol. 60(6), pages 650-666.
    16. Sylwia Pieńkowska-Kamieniecka & Damian Walczak & Anna Bera, 2019. "Income and Social Determinants of Old-Age Savings: Evidence from Poland," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 8, November.
    17. Adriana Helena Cruz León & José Carlos Trejo García & Humberto Ríos Bolívar, 2019. "Desarrollo de un modelo logit para examinar el comportamiento del ahorro en la región centro de México, de acuerdo al perfil de los hogares," Remef - Revista Mexicana de Economía y Finanzas Nueva Época REMEF (The Mexican Journal of Economics and Finance), Instituto Mexicano de Ejecutivos de Finanzas, IMEF, vol. 14(1), pages 57-77, Enero-Mar.
    18. Hans Fehr & Manuel Kallweit & Fabian Kindermann, 2009. "Marital Risk, Family Insurance, and Public Policy," SOEPpapers on Multidisciplinary Panel Data Research 226, DIW Berlin, The German Socio-Economic Panel (SOEP).
    19. Kristijan Kotarski & Luka Brkic, 2017. "Political Economy of Banking and Debt Crisis in the EU: Rising Financialization and its Ramifications," Review of Radical Political Economics, Union for Radical Political Economics, vol. 49(3), pages 430-455, September.
    20. Marianna Schaubert, 2023. "Do Alimony Regulations Matter Inside Marriage? Evidence from the 2008 Reform of the German Maintenance Law," Journal of Labor Research, Springer, vol. 44(1), pages 145-178, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bargain, Olivier & González, Libertad & Keane, Claire & Özcan, Berkay, 2012. "Female labor supply and divorce: New evidence from Ireland," European Economic Review, Elsevier, vol. 56(8), pages 1675-1691.
    2. Ho-Po Crystal WONG, 2016. "Credible Commitments and Marriage: When the Homemaker Gets her Share at Divorce," JODE - Journal of Demographic Economics, Cambridge University Press, vol. 82(3), pages 241-279, September.
    3. García-Ramos, Aixa, 2021. "Divorce laws and intimate partner violence: Evidence from Mexico," Journal of Development Economics, Elsevier, vol. 150(C).
    4. Filippo Pericoli & Luigi Ventura, 2012. "Family dissolution and precautionary savings: an empirical analysis," Review of Economics of the Household, Springer, vol. 10(4), pages 573-595, December.
    5. Katie R. Genadek, 2018. "Unilateral Divorce and Time Allocation in the United States," Feminist Economics, Taylor & Francis Journals, vol. 24(1), pages 63-87, January.
    6. Elizabeth Horner, 2014. "Continued Pursuit of Happily Ever After: Low Barriers to Divorce and Happiness," Journal of Family and Economic Issues, Springer, vol. 35(2), pages 228-240, June.
    7. Alessandra Voena, 2015. "Yours, Mine, and Ours: Do Divorce Laws Affect the Intertemporal Behavior of Married Couples?," American Economic Review, American Economic Association, vol. 105(8), pages 2295-2332, August.
    8. Fernández, Raquel & Wong, Joyce Cheng, 2014. "Free to Leave? A Welfare Analysis of Divorce Regimes," CEPR Discussion Papers 10047, C.E.P.R. Discussion Papers.
    9. Hoehn-Velasco, Lauren & Penglase, Jacob, 2021. "Does unilateral divorce impact women’s labor supply? Evidence from Mexico," Journal of Economic Behavior & Organization, Elsevier, vol. 187(C), pages 315-347.
    10. Raquel Fernández & Joyce Cheng Wong, 2014. "Free to Leave? A Welfare Analysis of Divorce Regimes," NBER Working Papers 20251, National Bureau of Economic Research, Inc.
    11. Stéphane Mechoulan, 2006. "Divorce Laws and the Structure of the American Family," The Journal of Legal Studies, University of Chicago Press, vol. 35(1), pages 143-174, January.
    12. Marcassa Stefania, 2013. "Divorce laws and divorce rate in the US," The B.E. Journal of Macroeconomics, De Gruyter, vol. 13(1), pages 997-1035, August.
    13. Ho Lun Wong, 2021. "Effect of marriage registration on fertility and intrahousehold distribution in Thailand," Pacific Economic Review, Wiley Blackwell, vol. 26(3), pages 312-338, August.
    14. González, Libertad & Viitanen, Tarja, 2008. "The Long Term Effects of Legalizing Divorce on Children," IZA Discussion Papers 3789, Institute of Labor Economics (IZA).
    15. Yunhee Chang & Ki Lee, 2006. "Household Debt and Marital Instability: Evidence from the Korean Labor and Income Panel Study," Journal of Family and Economic Issues, Springer, vol. 27(4), pages 675-691, December.
    16. Jungmin Lee & Mark L. Pocock, 2007. "Intrahousehold allocation of financial resources: evidence from South Korean individual bank accounts," Review of Economics of the Household, Springer, vol. 5(1), pages 41-58, March.
    17. González-Val, Rafael & Marcén, Miriam, 2012. "Unilateral divorce versus child custody and child support in the U.S," Journal of Economic Behavior & Organization, Elsevier, vol. 81(2), pages 613-643.
    18. Betsey Stevenson, 2008. "Divorce Law and Women's Labor Supply," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 5(4), pages 853-873, December.
    19. Chigavazira, Abraham & Fisher, Hayley & Robinson, Tim & Zhu, Anna, 2019. "The Consequences of Extending Equitable Property Division Divorce Laws to Cohabitants," IZA Discussion Papers 12102, Institute of Labor Economics (IZA).
    20. Shoshana Grossbard & Victoria Vernon, 2014. "Common law marriage and couple formation," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 3(1), pages 1-26, December.

    More about this item

    Keywords

    divorce law; divorce; saving; marriage;
    All these keywords.

    JEL classification:

    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • D10 - Microeconomics - - Household Behavior - - - General
    • K36 - Law and Economics - - Other Substantive Areas of Law - - - Family and Personal Law
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp3726. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.