Bargaining in the Shadow of Joint Parenting

Abstract:     
This paper uses a unique data set on divorcing couples to analyze the effects of a change in legal entitlement within the family. In particular, we analyze the 1997 change to custody provisions in the state of Oregon. Previous to 1997, Oregon assigned custody based on the discretion of the court, in the best interests of the child. This was changed to a presumption of joint parenting, which manifests in the courts encouraging and imposing joint (or shared) custody in cases that otherwise would have had sole custody arrangements. By presumption is meant the court's starting point, and that arguments must be made to alter the court's position. We chose the state of Oregon for reasons of data availability and because there was an actual change in law. However, joint parenting laws are not restricted to one state. In fact, Iowa and Maine have also changed their law and there is legislative activity regarding joint parenting in most states. More than forty states (and the District of Columbia) have class action suits over equal treatment in custody awards.

Our emphasis in this paper is empirical, and we show quite clearly that changes to the legal presumption of custody were not neutral. The move to legal joint parenting led to changes in the allocation of children, not changes in side payments. We also show that the simple change in threat point led to many different responses in behavior. Our results are consistent with the general bargaining literature in terms of who benefits from a change in bargaining position, but the results show how complicated the manifestation can be. Thus, we empirically explore how this legal change led to changes in filing behavior, timing of divorce, custody arrangements, acrimony, accusations of wrongdoing, post-divorce court motions, and dollar transfers.

Number of Pages in PDF File: 22

Keywords: bargaining, divorce, Coase Theorem, joint custody, transaction costs, mediation, dispute resolution, child custody

JEL Classification: D74, J12, K41

working papers series