The Effects of Divorce Risk on the Labour Supply of Married Couples

Kerry L. Papps, Cornell University

This paper presents a model of lifetime utility maximization 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 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 proportional hazard models and are included in regressions of annual hours. Married women are found to work more when they face a high divorce probability. This relationship holds both over an individual's life-cycle and across people with different inherent risks of divorce and is robust to the use of alternative marital transition measures.

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Presented in Session 135: Union Dissolution