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KDI 경제교육·정보센터

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최신자료
Stuck in a marriage: Labor market shocks, divorce and intra-household reallocation
Deutsche Bundesbank
2025.01.21
Families play an important role in providing insurance against adverse economic shocks. It is well documented in the literature that they adjust within-family decisions, such as consumption and labor supply, after a shock. However, there is little research on whether and how families change the structure of the family itself, such as divorce. This paper studies empirically and theoretically the impact of labor market shocks on divorce and intra-household reallocation exploiting a natural-experimental earthquake shock and large-scale panel data.

We show empirically that the probability of divorce of households who are stronger affected by the earthquake declines because the value of divorce for wives decreases due to the labor market shock, while the value of marriage remains high due to the family insurance. We show that these results are consistent with a collective household model with limited commitment. Consistent with our theoretical prediction, we provide direct evidence of an intra-household reallocation of consumption and leisure from the wife to the husband.