Female Labor Supply and Divorce: New Evidence from Ireland

31 Pages Posted: 29 Jun 2010

See all articles by Olivier Bargain

Olivier Bargain

IZA Institute of Labor Economics; University College Dublin (UCD)

Libertad Gonzalez

Universitat Pompeu Fabra; Barcelona Graduate School of Economics (Barcelona GSE); IZA Institute of Labor Economics

Claire Keane

Economic and Social Research Institute, Ireland

Berkay Özcan

Yale University

Abstract

If participation in the labor market helps to secure women's outside options in the case of divorce/separation, an increase in the perceived risk of marital dissolution may accelerate the increase in female labor supply. This simple prediction has been tested in the literature using time and/or spatial variation in divorce legislation (e.g., across US states), leading to mixed results. In this paper, we suggest testing this hypothesis by exploiting a more radical policy change, i.e., the legalization of divorce. In Ireland, the right to divorce was introduced in 1996, followed by an acceleration of marriage breakdown rates. We use this fundamental change in the Irish society as a natural experiment. We follow a difference-in-difference approach, using families for whom the dissolution risk is small as a control group. Our results suggest that the legalization of divorce contributed to a significant increase in female labor supply, mostly at the extensive margin. Results are not driven by selection and are robust to several specification checks, including the introduction of household fixed effects and an improved match between control and treatment groups using propensity score reweighting.

Keywords: divorce law, natural experiment, labor supply, fixed effects, propensity score

JEL Classification: J12, J22, D10, D13, K36

Suggested Citation

Bargain, Olivier and Gonzalez, Libertad and Keane, Claire and Özcan, Berkay, Female Labor Supply and Divorce: New Evidence from Ireland. IZA Discussion Paper No. 4959, Available at SSRN: https://ssrn.com/abstract=1631094

Olivier Bargain (Contact Author)

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

University College Dublin (UCD) ( email )

Belfield, Dublin 4 4
Ireland
+353 1 716 8357 (Phone)
+353 1 283 0068 (Fax)

HOME PAGE: http://www.ucd.ie/economics/staff/obargain/obargain.htm

Libertad Gonzalez

Universitat Pompeu Fabra ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain

Barcelona Graduate School of Economics (Barcelona GSE)

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Claire Keane

Economic and Social Research Institute, Ireland ( email )

Whitaker Square
Sir John Rogerson's Quay
Dublin 2
United States

Berkay Özcan

Yale University ( email )

New Haven, CT 06520
United States

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