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Article
Divorce and the option value of marital search
Metroeconomica (2009)
  • Valerio Filoso, University of Naples Federico II
Abstract
This work tests whether the introduction of divorce law changes the timing of marital search. Rational agents should adjust to the divorce risk by increasing the average search spell, whereas option value theory stresses the role of irreversible investments: in this case, the new exit option should result in shorter spells. Using a dynamic model of marital search, a new data set of retrospective individual Italian data, and two robust statistical specifications, we find strong evidence that the legal innovation actually lowered the age at marriage, thereby worsening the level of marital matching, and possibly reinforcing self-fulfilling prophecies of divorce.
Keywords
  • Marriage economics,
  • Search theory,
  • Duration models
Publication Date
2009
Citation Information
Valerio Filoso. "Divorce and the option value of marital search" Metroeconomica Vol. 60 Iss. 1 (2009)
Available at: http://works.bepress.com/valerio_filoso/4/