February 2002

IZA DP No. 439: Does Divorce Law Matter?

published in: Journal of the European Economic Association, 2004, 2 (4), 607-633

In this paper we derive an explicit model of negotiations between spouses when utility is (partially) transferable only in case of separation. We show that inefficient separation may occur in equilibrium even under consensual divorce law. This provides theoretical support for the view that changes in social norms rather than in legislation may be responsible for increasing divorce rates.