No-Fault Divorce and the Division of Marital Assets

23 Pages Posted: 28 Sep 2005  

Philip A. Curry

University of Waterloo

Date Written: September 15, 2005

Abstract

This paper examines the incentives that divorce laws concerning property division can have for divorce and investment in marital assets. In particular, it notes the spread of equal division of matrimonial property. Canada and 10 US states currently use a community rule, which divides matrimonial property equally with very few exceptions, while the rest of the US states employ common-law rules, which start with the presumption of equal division but can make changes based on such things as contributions to the asset. This paper examines whether the community rule could be efficiency enhancing relative to the common-law rule. The paper considers an environment in which spouses have multiple inputs, such as time and money, to a marital asset, but the choices a spouse makes with regards to one input, say time, is not observable to the courts. In such an environment, it is demonstrated that the community rule leads to efficient investment in the marital asset while the common-law rule does not. Further, sufficient conditions are found for which the community rule leads to a lower divorce rate than the common-law rule.

Keywords: no-fault divorce, property division laws, efficiency

JEL Classification: K11, D13, D61

Suggested Citation

Curry, Philip A., No-Fault Divorce and the Division of Marital Assets (September 15, 2005). Available at SSRN: https://ssrn.com/abstract=805326 or http://dx.doi.org/10.2139/ssrn.805326

Philip A. Curry (Contact Author)

University of Waterloo ( email )

Waterloo, Ontario N2L 3G1
Canada

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