Divorce and Property Division Laws Shape Human Capital Investment

Abstract

In theory, unilateral divorce laws alter the private incentive to invest in human capital by permitting either spouse to initiate the division of the marital assets. Using several causal research designs we show that both men and women are less likely to attain a bachelor’s degree in states with unilateral divorce laws—especially individuals who were exposed to the laws when making educational choices and who live in states requiring an even split of assets upon divorce. Unilateral divorce laws do not distort human capital investment generically—but rather in contexts where the property division laws invite moral hazard.