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Limited Liability and Investment: Evidence from Changes in Marital Property Laws in the U.S. South, 1840-1850

Peter A. E. Koudijs and Laura Salisbury ()
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Peter A. E. Koudijs: Stanford University and NBER

Research Papers from Stanford University, Graduate School of Business

Abstract: We study the impact of marital property legislation passed in the U.S. South in the 1840s on household investment. These laws protected the assets of newly married women from creditors in a world of virtually unlimited liability. We compare couples married after the passage of a law with couples from the same state who were married before. Consistent with a simple model of household borrowing that trades off agency costs against risk sharing, the effect on household asset holdings was heterogeneous: if most household property came from the husband (wife), the law led to an increase (decrease) in total assets.

JEL-codes: D14 G33 N21 (search for similar items in EconPapers)
Date: 2018-11
New Economics Papers: this item is included in nep-his and nep-law
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Journal Article: Limited liability and investment: Evidence from changes in marital property laws in the US South, 1840–1850 (2020) Downloads
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