The Impact of Divorce Laws on the Equilibrium in the Marriage Market

Abstract

Does easier divorce affect who marries whom? I exploit time variation in the adoption of unilateral divorce across the United States and show that it increases assortative matching among newlyweds. To unravel the underlying mechanisms, I estimate a novel life-cycle equilibrium model of marriage, labor supply, consumption, and divorce under the baseline mutual consent divorce regime. By solving the model under unilateral divorce, I find that, consistent with the data, assortative matching increases. Effects are largely due to changes in choices when risk sharing and cooperation within marriage decrease, which highlights the importance of considering equilibrium effects when evaluating family policies.