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IZA Discussion Paper No. 2395
October 2006
The Effects of Divorce Risk on the Labour Supply of Married Couples

This paper presents a model of lifetime utility maximisation in which expectations of future marital transitions play a role in the determination of work hours. Married people with spouses who earn more are predicted to devote additional time to the labour market when they are confronted with a high likelihood of divorce and vice versa. Similarly, work hours should be positively associated with marriage probability for those single people who expect to marry a higher earning spouse. These predictions are tested using data from the National Longitudinal Survey of Youth 1979. Marriage and divorce probabilities are calculated from Cox proportional hazard models and are included in regressions of annual hours. Married women are found to work more when they face a high probability of divorce. This relationship holds both over an individual’s life-cycle and across people with different inherent risks of divorce. Similar results are found when a woman’s happiness with her marriage is used as a proxy for divorce risk.

Kommunikation
Mark Fallak
mark.fallak@liser.lu
+352 585-855-526
World of Labour
Olga Nottmeyer
olga.nottmeyer@liser.lu
+352 585-855-501
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Christina Gathmann
christina.gathmann@liser.lu

Das IZA@LISER-Netzwerk ist eine weltweite Gemeinschaft für exzellente Forschung in der Arbeitsmarktökonomie und angrenzenden Fachgebieten. Nach dem Wechsel von Bonn wird das Netzwerk nun am Luxembourg Institute of Socio-Economic Research (LISER) koordiniert.

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