Why Divorce Laws Matter: Incentives for Noncontractible Marital Investments Under Unilateral and Consent Divorce

Posted: 13 Apr 2009

See all articles by Abraham L. Wickelgren

Abraham L. Wickelgren

University of Texas at Austin - School of Law; University of Texas at Austin - Center for Law, Business, and Economics

Date Written: May 2009

Abstract

The Coase Theorem suggests that married couples will divorce if and only if doing so increases their joint surplus, regardless of the legal rules governing divorce. This does not mean, however, that divorce laws only affect the distribution of rents. Because the distribution of rents affects each spouse's incentives for noncontractible investments, divorce laws can affect the joint welfare of the couple. This article analyzes the effects of the consent divorce regime and the unilateral divorce regime on incentives for selfish and cooperative marital investments. Using these results, the article demonstrates how endogenous choice of marriage with noncontractible investments can explain some recent empirical results concerning the effects of the shift from consent divorce to unilateral divorce. (JEL C78, D1, D23, J12, J18, K3, K36)

Suggested Citation

Wickelgren, Abraham L., Why Divorce Laws Matter: Incentives for Noncontractible Marital Investments Under Unilateral and Consent Divorce (May 2009). The Journal of Law, Economics, & Organization, Vol. 25, Issue 1, pp. 80-106, 2009. Available at SSRN: https://ssrn.com/abstract=1372576 or http://dx.doi.org/10.1093/jleo/ewm050

Abraham L. Wickelgren (Contact Author)

University of Texas at Austin - School of Law ( email )

727 East Dean Keeton Street
Austin, TX 78705
United States

University of Texas at Austin - Center for Law, Business, and Economics

Austin, TX 78712
United States

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