Marriage and Divorce under Labor Market Uncertainty

Married women’s greater allocation of time towards household chores and childcare suggests that an increase in their labor supply may result in reduced marital surplus and stability. This mechanism can explain persistent gender gaps in labor supply if the potential reduction is considered in decisions about reservation wages and job search efforts. An implication is that divorces may be caused by transitions into employment. This paper analyzes these “labor market divorces” in a novel model of simultaneous search in labor and marriage markets. Labor market search intensity choices depend on marital status and the partner’s type. The model matches key trends in German household survey data: declining marriage rates, increasing employment rates of married women, and a reduction of married women’s domestic time inputs. Our laboratory to quantify the role of labor market divorces is a period of rapid employment growth in Germany that started in the mid-2000s. This development in the labor market was not neutral with respect to marriage. Although more married women entering employment led to more divorces, the decrease in divorces caused by job loss among married men was greater, resulting in a net decrease in the overall divorce rate.

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