Advertisement

Review of Economics of the Household

, Volume 13, Issue 1, pp 193–218 | Cite as

The effects of a Danish legal reform on divorce probabilities and pension savings

  • Anna AmilonEmail author
Article

Abstract

This paper investigates how a recent Danish legal reform that changed how pension savings are shared upon divorce influenced divorce probabilities and pension savings. A simple theoretical model predicts that the reform should cause couples to either get divorced or sign postnuptial agreements. Using a large panel of Danish register data, I find that the probability of getting divorced increased by between 0.1 and 0.3 % for couples that were affected by the reform, compared to couples that were not. Although these increases might appear small, given that the average divorce rates for the couples in the sample was less than 1 %, the relative increase in divorce probabilities caused by the reform was between 12 and 40 %. The effects are largest when the wife is the one gaining from getting divorced. Moreover, the reform influenced wives’, but not husbands’, pension savings and caused an increase in the number of postnuptial agreements.

Keywords

Divorce Legal reform Pension savings Gender differences Differences in differences 

JEL Classification

C23 H3 J12 

References

  1. Allen, D. (1992). Marriage and divorce: Comment. American Economic Review, 82, 679–685.Google Scholar
  2. Becker, G. S. (1973). A theory of marriage: Part I. The Journal of Political Economy, 81, 813–846.CrossRefGoogle Scholar
  3. Becker, G. S. (1974). A theory of marriage: Part II. The Journal of Political Economy, 82, 11–26.CrossRefGoogle Scholar
  4. Becker, G. S., Landes, E., & Michael, R. T. (1977). An economic analysis of marital instability. Journal of Political Economy, 85, 1141–1187.CrossRefGoogle Scholar
  5. Bonke, J., & Uldall-Poulsen, H. (2007). Why do families actually pool their income? Evidence from Denmark. Review of Economics of the Household, 5, 113–128.CrossRefGoogle Scholar
  6. Browning, M. (2000). The saving behaviour of a two-person household. Scandinavian Journal of Economics, 102, 235–251.CrossRefGoogle Scholar
  7. Browning, M., & Lusardi, A. (1996). Household saving: Micro theories and micro facts. Journal of Economic Literature, 34, 1797–1855.Google Scholar
  8. Clark, S. (1999). Law, property, and marital dissolution. Economic Journal, 109, 41–54.CrossRefGoogle Scholar
  9. Danish Labor Force Survey. (2009). Calculations based on data available on Statistics Denmark’s website: http://www.statistikbanken.dk/statbank5a/default.asp?w=1280. Accessed 2010-10-08).
  10. Deding, M., & Holt, H. (2010). Hvorfor har vi lønforskelle mellem kvinder og mænd i Danmark? – En antologi om ligeløn i Danmark. [Why is there a Gender Earnings Gap in Denmark? – An Anthology on Equal Earnings in Denmark.] Copenhagen: SFI – The Danish National Centre for. Social Research, 2010, 12.Google Scholar
  11. DR Penge. (2006). Nye pensionsregler giver travlhed hos advokater. [New pension rules keep lawyers busy.]. Danmarks radio, Penge. (2006-10-11).Google Scholar
  12. Folketinget. (2005). Lov om ændring af lov om ægteskabets retsvirkninger og lov om skifte af fællesbo m.v. med flere love (Pensionsrettigheders behandling ved død samt separation og skilsmisse). 2005-06 L 146.Google Scholar
  13. Friedberg, L. (1998). Did unilateral divorce raise divorce rates?: Evidence from panel data. The American Economic Review, 88, 608–627.Google Scholar
  14. Goda, G., Shoven, J. & Slavov, S. (2007). Social security and the timing of divorce. NBER Working Paper No. 13382.Google Scholar
  15. Gonzalez, L., & Viitanen, T. K. (2009). The effect of divorce laws on divorce rates in Europe. European Economic Review, 53, 127–138.CrossRefGoogle Scholar
  16. Grønborg, J. U. (2006). Oversigt over 30 kritikpunkter og uafklarede spørgsmål vedrørende pensionsdelingsreformen i 2006. [Overview of 30 points of criticism and unanswered questions regarding the pension sharing reform in 2006]. http://www.themis.dk/synopsis/docs/Oversigt_over_aabne_spoergsmaal_ved_pensionsdelingsreformen.asp. Accessed 2012-04-26).
  17. Grossbard-Shechtman, A. (1984). A theory of allocation of time in markets for labour and marriage. The Economic Journal, 94, 863–882.CrossRefGoogle Scholar
  18. Gustman, A. & Steinmeier, T. (1999). Employer provided pension data in the NLS mature women’s survey and in the health and retirement survey. NBER Working Paper No. 7174.Google Scholar
  19. Heckman, J., La Londe and Smith, J. (1999). The Economics and econometrics of active labor market programs. In O. Ashenfelter, & D. Card (Eds.): Handbook of labour economics. Amsterdam: North-Holland, pp. 1865–2097.Google Scholar
  20. Heim, B. (1998). Does child support enforcement reduce divorce rates? The Journal of Human Resources, 38, 773–791.CrossRefGoogle Scholar
  21. Hoffman, S., & Duncan, G. (1995). The effect of incomes, wages and AFDC benefits on marital disruption. The Journal of Human Resources, 30, 19–41.CrossRefGoogle Scholar
  22. Houmann, A. L. (2006). Hurtig skilsmisse kan redde kvinders økonomi [Speedy divorce can save women’s economy.] Berlingske Tidende (2006-04-14).Google Scholar
  23. Jørgensen, M. (2007). Danskernes pensionsopsparingerEn deskriptiv analyse. [Pension Savings in DenmarkA Descriptive Analysis.] Copenhagen: SFI – The Danish National Centre for. Social Research, 2007, 21.Google Scholar
  24. Lee, B., & Pocock, M. L. (2007). Intrahousehold allocation of financial resources: Evidence from South Korean individual bank accounts. Review of Economics of the Household, 5, 41–58.CrossRefGoogle Scholar
  25. Lønstrup, D. (2006a). Pensionslov giver spekulations i skilsmisser. [Pension law leads couples to speculate in divorce.] Politiken. (2006-10-23).Google Scholar
  26. Lønstrup, D. (2006b). Mænd vil ikke dele pensionen med konen. [Husbands do not want to share their pensions with their wives. Politiken. (2006-10-24).Google Scholar
  27. Lønstrup, D. (2006c). S forsvarer lov om deling af pensioner. [Social Democrats defend law regulating the sharing of pensions.] Politiken. (2006-10-25).Google Scholar
  28. Lønstrup, D. (2006d). Kun få ægtepar har sikret ligedeling af pensioner. [Few married couples have secured equal sharing of pensions.] Politiken. (2006-12-20).Google Scholar
  29. Lundberg, S. & Ward-Batts, J. (2000). Saving for retirement: household bargaining and household net worth. Mimeo, Department of Economics, University of Washington, January.Google Scholar
  30. Lusardi, A., & Mitchell, O. (2008). Planning and financial literacy. How do women fare? American Economic Review, 48, 413–417.CrossRefGoogle Scholar
  31. McGarry, K. & Davenport, A. (1997). Pensions and the distribution of wealth. NBER Working Papers No. 6171.Google Scholar
  32. Mechoulan, S. (2005). Economic theory’s stance on no-fault divorce. Review of Economics of the Household, 3, 337–359. doi: 10.1007/s11150-005-3461-3.CrossRefGoogle Scholar
  33. Minister for Ligestilling. (2007). Fakta om Ligestilling 2006. [Facts on Gender Equality 2006] Copenhagen: Ligestillingsafdelingen, Minister for ligestilling.Google Scholar
  34. Nixon, L. (1997). The effect of child support enforcement on marital dissolution. The Journal of Human Resources, 32, 159–180.CrossRefGoogle Scholar
  35. Nyhus, P. (2006). Kun få garderer sig mod ny lov om pensioner. [Few protect themselves against new law on pensions] Berlingske Tidende. (2006-12-02).Google Scholar
  36. Peters, E. (1986). Marriage and divorce: Informational constraints and private contracting. The American Economic Review, 76, 437–454.Google Scholar
  37. Peters, E. (1993). The Importance of financial conciderations in divorce decisions. Economic Inquiry, 31, 71–86.CrossRefGoogle Scholar
  38. Skatteministeriet. (2012). Pensionsbeskattningsloven §30. https://www.retsinformation.dk/forms/r0710.aspx?id=133111. Accessed 2012-04-26).
  39. Skovgaard, L. E. (2006). Tjen store penge på en hurtig skilsmisse. [Earn big bucks on fast divorce]. Business.dk (2006-10-06).Google Scholar
  40. Sundén, A., & Surette, B. (1998). Gender differences in the allocation of assets in retirement savings plans. American Economic Review, 88, 207–211.Google Scholar
  41. Tjøtta, S., & Vaage, K. (2006). Public transfers and marital dissolution. Journal of Population Economics, 21, 419–437.CrossRefGoogle Scholar
  42. Whittington, L. A., & Alm, J. (1997). ‘Til death or taxes do us part: The effect of income taxation on divorce. The Journal of Human Resources, 32, 388–412.CrossRefGoogle Scholar
  43. Wolfers, J. (2006). Did unilateral divorce laws raise divorce rates?: A reconciliation and new results. The American Economic Review, 96, 1802–1820.CrossRefGoogle Scholar
  44. Wooley, F. (2003). Control over money in marriage. In S. A. Grossbard-Shechtman (Ed.), Marriage and the economy: Theory and evidence from advanced industrial societies. Cambridge: Cambridge University Press.Google Scholar

Copyright information

© Springer Science+Business Media New York 2012

Authors and Affiliations

  1. 1.SFI-The Danish National Centre for Social ResearchCopenhagenDenmark

Personalised recommendations