Understanding the Effects of Marriage and Divorce on Financial Investments: The Role of Background Risk Sharing

35 Pages Posted: 3 Sep 2010 Last revised: 14 Mar 2014

See all articles by Charlotte Christiansen

Charlotte Christiansen

Aarhus University - CREATES

Juanna Schrøter Joensen

University of Chicago; Institute for the Study of Labor (IZA)

Jesper Rangvid

Copenhagen Business School

Multiple version iconThere are 2 versions of this paper

Date Written: March 13, 2014

Abstract

We investigate how changes in marital status affect financial investments and how these effects vary with background risk. We use detailed register based panel data and difference-in-differences estimators to benchmark common unobserved influences on financial investments. Women increase the fraction of wealth invested in stocks after marriage and decrease it after divorce, whereas men show the opposite behavior. Households whose joint labor income risk is reduced more by marriage have a higher increase in their exposure to risky assets in marriage. Thus income risk sharing in the household is important for financial risk-taking and investment responses to marital transitions.

Keywords: Gender, Marriage and divorce, Stock market participation, Portfolio choice, Labor income risk sharing

JEL Classification: G11, J12, J16, D14

Suggested Citation

Christiansen, Charlotte and Joensen, Juanna Schrøter and Rangvid, Jesper, Understanding the Effects of Marriage and Divorce on Financial Investments: The Role of Background Risk Sharing (March 13, 2014). Available at SSRN: https://ssrn.com/abstract=1670612 or http://dx.doi.org/10.2139/ssrn.1670612

Charlotte Christiansen (Contact Author)

Aarhus University - CREATES ( email )

Fuglesangs Alle 4
Aarhus V, DK 8210
Denmark

Juanna Schrøter Joensen

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

Institute for the Study of Labor (IZA) ( email )

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

Jesper Rangvid

Copenhagen Business School ( email )

Solbjerg Plads 3
Frederiksberg C, DK - 2000
DENMARK

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
221
Abstract Views
2,104
rank
165,952
PlumX Metrics