Marriage, Divorce, and Interstate Risk Sharing

Abstract

In this paper, we study the importance of marriage for interstate risk sharing in the US. We find that US federal states in which married couples account for a higher share of the population are less exposed to state‐specific output shocks. Thus, in addition to improving the allocation of risk at the individual level, marriage also has implications for risk sharing at the more aggregated state level. Quantitatively, the impact of marriage on interstate risk sharing varies over divorce regimes.

Keywords: Risk sharing, marriage, divorce, family law

JEL Classification: E21, G21, J12, K36