Public Transfers and Marital Dissolution

In this paper we analyse determinants of marital dissolution. The focus is on the alleged influence from public transfers, including governmental transfers directed towards divorced families, child allowance, and child support awards. We use a Norwegian panel of 2.800 couples who were married in 1989, together with a broad range of socio-economic variables, including (expected) public and private transfers in case of divorce. The sample is observed over a six-year period, with the purpose of registering marital dissolution. Our findings are consistent with matching models where divorce is explained according to assortative mating hypothesis. We find that the level of transfers has a significantly positive effect on the divorce probability, and that the distribution of transfers in favour of the wife increases the same probability. The fact that internal re-distribution between spouses affects the divorce propensity is consistent with non-unitary family models, but at odds with the predictions from unitary and/or common wealth models.