Divorce and the Duality of Marital Payoff
Empirical studies on the determinants of divorce are scarce in economics. One reason is the duality of the value of marriage, which combines economic gains for which proxies can be found and non-pecuniary gains that are much harder to measure. The literature on marital stability has therefore focused on the impact of income differentials between partners, omitting shocks to the non-economic components of the value of the marriage. We fill in the gap by extending the model of marriage dissolution to account for a time-varying non-pecuniary quality of the match. To explore its importance, we exploit a unique data set from the Russia Longitudinal Monitoring Survey (RLMS) which provides both labor market outcomes of the couples and subjective well-being data. Our results suggest that the monetary and non-monetary components enter the joint surplus additively, with gender-specific marginal rates of substitution. The valuation of the monetary components also reveals gender asymmetry, which we link to differences in remarriage prospects.
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- June 3, 2016