| Abstract: | This paper tests whether the liberalisation of divorce law or economic factors can explain the post-war growth of divorce rates in Great Britain. Timing differences regarding the dates of legal innovations in England & Wales relative to Scotland are exploited to test for divorce law effects. No effect on marital dissolution of extending the grounds for the divorce can be detected, though other innovations in family law have had a powerful but generally temporary impact on divorce rates via their effect on transaction costs and settlement rules. Economic theory suggests that rising relative wages of women have reduced the gains from remaining married by inter alia diminishing the benefits of household specialisation and that rising real earnings of women have increased post divorce welfare by providing a measure of financial independence. The results are consistent with the real, but not the relative, wage hypothesis. |
