Angelini, Viola Bertoni, Marco Stella, Luca Weiss, Christoph T.
IZA Discussion Papers No. 10363
Institute for the Study of Labor (IZA), Bonn
By allowing people to obtain divorce without the consent of their spouse, Unilateral Divorce Laws (UDLs) increase the risk of divorce. Using the staggered introduction of UDLs across European countries, we show that households exposed to UDLs for longer time accumulate more savings. This effect holds for both financial and total wealth and is stronger at higher quantiles of the wealth distribution. Longer exposure to UDLs also increases female labour market participation and financial literacy, contributing to uncover the mechanisms through which the risk of divorce may affect savings. Our results are consistent with a precautionary motive for saving.