This work tests whether the introduction of divorce law changes the timing of marital search. Rational agents should adjust to the divorce risk by increasing the average search spell, whereas option value theory stresses the role of irreversible investments: in this case, the new exit option should result in shorter spells. Using a dynamic model of marital search, a new data set of retrospective individual Italian data, and two robust statistical specifications, 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.
Divorce and the Option Value of Marital Search / Filoso, Valerio. - (2007). (Intervento presentato al convegno CERGE-EI Research Seminar tenutosi a Charles University, Prague nel September).
Divorce and the Option Value of Marital Search
FILOSO, VALERIO
2007
Abstract
This work tests whether the introduction of divorce law changes the timing of marital search. Rational agents should adjust to the divorce risk by increasing the average search spell, whereas option value theory stresses the role of irreversible investments: in this case, the new exit option should result in shorter spells. Using a dynamic model of marital search, a new data set of retrospective individual Italian data, and two robust statistical specifications, 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.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
