Unilateral Divorce, Assortative Mating, and Household Income Inequality

Abstract

This paper examines how unilateral divorce affects assortative mating, and household income inequality across newly married couples as a result of changes in the matching patterns. I exploit variation in the adoption and timing of unilateral divorce laws using three estimators---the two-way fixed effects, DID_M, and synthetic control estimators. I find that unilateral divorce increases income inequality by 6–20%. This is likely driven by increased assortative mating---unilateral divorce moderately increases educational sorting and substantially increases income sorting. This is partially driven by reduced marriage entry and changes in women’s labor force participation at the time of marriage.

Keywords: Divorce Law, Unilateral Divorce, Marriage Market, Assortative Mating, Household Income Inequality

JEL Classification: J12, K36