Divorce Property Division Laws and the Decision to Marry or Cohabit

Abstract

This article presents a model of the choice between marriage and cohabitation that is used to analyze the implications of changing from a title-based division of property on divorce to an equal sharing regime. There are two opposing effects. In line with popular expectations, the change to equal sharing discourages some wealthy individuals from marrying since they risk losing half of their assets in the event of divorce. Offsetting this, equal sharing property division induces efficient investment in marriage, increasing the value of marriage relative to cohabitation for some couples. Overall, the impact on the number of marriages relative to cohabitations is ambiguous, although there will be more marriages where it is more difficult to invest, and where couples are more similar to each other.

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