Reproducibility package for Untying The Knot: Divorce Legalization And The Decline Of Marriage

This study investigates the impact of divorce legalization on marriage decisions and intra-household specialization using Chile’s 2004 reform as a case study. Opponents feared that introducing divorce would weaken the commitment value of marriage. Instead, we document a reversal of sharply declining trends in marriage rates, marital fertility, and the choice of the community property marriage regime in the 15 years following the law. These effects were most pronounced among highly educated women. We hypothesize that the introduction of legal divorce with equal marital asset division allowed husbands to insure homemakers against the economic risks of informal marital separation, thereby incentivizing specialization and fertility. In support of this mechanism, we show that the law caused a large reduction in the labor supply of young women married before the law under community property compared to those married under asset separation, who were not affected by equal asset division. Furthermore, we find that the concentration of these effects among the highly educated is driven by their higher levels of household assets, as predicted by simulations from a limited-commitment, collective model of marital investment.