"Committing While We Still Can: Marital Regime s, Labor Supply and Household Intertemporal Behavior" (with Andrea Mattia, Banca d'Italia)
Abstract:
This paper studies how households use premarital agreeme nts to commit to how marital assets will be divided in case of divorce. We examine a setting in which the cost of such agreements is minimal: by marki ng their choice on the marriage license application, Italian couples can ch oose at no financial cost between community property, in which assets are s plit equally between husband and wife, and separation of property, in which each spouse retains the assets in their name. Using multiple administrativ e and survey datasets, we document that a sizable minority of Italian coupl es chooses community property, and that their selection is systematic: coup les in which the wife undertakes substantial household-specific investments are especially likely to elect community property, and the take-up of the regime declines as female labor market attachment increases. We show that t hese patterns are not consistent with a standard limited-commitment model o f household behavior with divorce as the only outside option to marital coo peration. Instead, we develop a dynamic model of marriage, female labor sup ply, savings, and divorce in which spouses can engage in non-cooperative be havior prior to divorce, and pre-commit to an equal split of assets to prom ote the wife's household-specific investments. The estimated model implies that, as female labor force participation rises and the gender wage gap nar rows, the value of this commitment falls. Lowering the cost of prenuptial c ontracting generates substantial welfare gains for couples and raises the v alue of marriage.
DTSTAMP:20260913T233935Z DTSTART:20260914T163000Z DTEND:20260914T180000Z SEQUENCE:0 TRANSP:OPAQUE END:VEVENT END:VCALENDAR