We study the role of education as insurance against a bad marriage in light of changing divorce laws during the 1970s. We build and estimate an equilibrium search model with education, marriage/divorce/remarriage, and household labor supply decisions. A key feature of the model is that women bear a larger share of the divorce burden, mainly because they are more closely tied to their children relative to men. Our focus on education is motivated by the fact that divorce laws typically allow spouses to keep the future returns from their human capital upon divorce (unlike their physical assets), making education a good insurance in divorce. In the model, women overtake men in college attainment during the 1990s, a feature of the data that has proved challenging to explain. Our counterfactual experiments indicate that the divorce law reform of the 1970s played an important role in these trends, explaining more than one-quarter of college attainment rate of women post-1970s and one-half of the rise in labor supply for married women. Further, results suggest a higher insurance value of education in divorce than marriage market signaling benefits of education especially for women post divorce reform.
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- College-gender gap
- Divorce law reform
- Female labor supply