'Til Death or Taxes Do Us Part: The Effect of Income Taxation on Divorce

Abstract

The effect of taxes on divorce has not been considered in previous empirical work on divorce. In this paper we examine the impact of the individual income tax on the likelihood of divorce. Using data from the Panel Study on Income Dynamics, we estimate a discrete-time hazard model of the probability of divorce from the first marriage. We find that couples respond to tax incentives in their decision to divorce, although these responses are typically small. We also estimate the impact of taxes on the separate divorce decisions of men and women. These results indicate that women clearly respond to tax incentives in their divorce decisions; the results for men are not always statistically significant.

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