Divorce and the Option Value of Marital Search

Valerio Filoso

CHILD Working Papers from CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY

Abstract: This works tests whether or not the introduction of divorce law changes the timing of marital search. Common sense suggests that rational agents should adjust to the divorce risk by increasing the average length of search spell, whereas the option value theory stresses the role played by irreversible investments: in this case, the new exit option available to married partners should result in shorter search spells. Using a dynamic model of marital search, a new dataset of retrospective individual Italian data, and two robust statistical specifications based upon the Before-After estimator, we find strong evidence that the legal innovation actually lowered the age at marriage, thereby worsening the level of marital matching, and possibly reinforcing self-fulfilling prophecies of divorce.

Keywords: Marital Search; Divorce; Marriag (search for similar items in EconPapers)
JEL-codes: C41 D83 J12 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2007-03
New Economics Papers: this item is included in nep-dge
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Related works:
Journal Article: DIVORCE AND THE OPTION VALUE OF MARITAL SEARCH (2009)
Working Paper: Divorce and the Option Value of Marital Search (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:wpc:wplist:wp03_07

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