The American family has undergone radical changes over the last decades. Marriage rates have been falling over the last thirty years and cohabitation has emerged as an important social institution. Divorce rates rose sharply starting in the mid-1960s, peaked in the early 1980s, and have been declining since (Figure 1). These dramatic demographic changes accompanied increased economic independence of women and radical changes in family law. Of course, the causal link between demographic, economic, and legal changes is non-trivial. The economic literature has focused so far on changes in divorce law. In particular, scholars have studied the impact of the move from mutual consent to unilateral divorce laws and changes in the laws regarding the division of matrimonial property.1
Figure 1. US marriage and divorce rates, 1969 - 2003
The joint custody reform
Custody law has garnered hardly any attention in the literature.2 The allocation of custody, however, is a crucial aspect of every divorce since it governs the actual post-divorce living arrangements and may have important welfare implications. Many states have changed their custody law fundamentally since the 1970s. Traditionally, after divorce one parent (usually the mother) was assigned sole custody and exclusively responsible for the child. The so-called non-custodian parent was restricted to specified visitation rights.
In 1973, Indiana was the first US state to introduce a law favouring joint custody (Brinig and Buckley, 1998). It has since spread to nearly all states. There are various forms of joint custody. One typically distinguishes between joint legal custody and joint physical custody. Joint legal custody means that both parents share the right and the obligation of making major decisions about their child’s upbringing (e. g. about schooling, religion, and health care). Joint physical custody means that the child spends a significant amount of time with each parent. In any case, joint custody shares the rights and obligations concerning the child between divorced parents more equally than sole custody.
There has been an ongoing debate – across academic disciplines including economics, law, psychology and sociology – between proponents and opponents of joint custody. Proponents typically argue that children benefit from ongoing support and resources from both parents, while opponents object that children under joint custody are exposed to ongoing parental conflict. The causal relationship between certain custody arrangements and child outcomes is far from clear, and the empirical evidence is mostly inconclusive.
Joint custody and the incentive to marry and to divorce
Even more fundamentally, the introduction of laws permitting joint custody of children after divorce may have an impact on the incidence of marriage and divorce. The move from sole custody to joint custody may cause a redistribution of the gains from marriage between spouses (redistribution effect). The party who gains from this redistribution (supposedly the man) faces a higher incentive to marry after the reform. Secondly, the option of joint custody may affect the expected utility in the state of divorce and the expected cost of the divorce process (cost effects). If joint custody reduces the expected monetary and emotional cost of divorce, the reform may increase the likelihood of divorce. Finally, joint custody may also affect the spouses’ behaviour during marriage and change their incentive to make marital-specific investments (behavioural effect). If it causes an increase in aggregate incentive to invest, we should observe an increase in the value of marriage and a raise in marriage rates. Higher levels of marital-specific investments should in turn reduce the likelihood of divorce. There are several potential countervailing effects of joint custody on the incentive to marry and to divorce, and it remains an empirical question if and how joint custody affects marriage and divorce rates.
In order to identify the causal effect of joint custody on the incidence of marriage and divorce, we exploit the variation occurring from the different timing of joint custody reforms across the US and the control group of divorcing couples without minors (for details see Halla 2009). Difference-in-differences estimates based on state panel data (from 1969 through 2003) show that the introduction of joint custody had no immediate impact on marriage rates, but we find a large and statistically significant increase in the marriage rate starting five years after the introduction of joint custody. The effect of the joint custody reform grows over time. Seven to eight years after the reform we observe an effect of 1.64 additional marriages in the treatment states relative to the control states. The full effect of the reform after fifteen years following the adoption of joint custody is equal to additional 3.68 marriages per 1,000 adults.3 This delayed and increasing causal effect of the reform is consistent with the gradual dissemination of joint custody awards.4
In contrast, we find no convincing evidence for an impact of joint custody on divorce rates. In sum, joint custody had a clear positive impact on the number of married people. It increased the stock of married people by about 1.5 percentage points and dampened the ongoing decline in marriage rates over the last thirty years. All of our results are robust to a number of alternative specifications (e.g. we control for the adoption of unilateral divorce laws.)
The short-side of the marriage market
Given the dominance of maternal custody under sole custody regimes, the introduction of joint custody has plausibly increased the incentive to marry for men, who typically more reluctant to marry. Consistently, we observe, based on data from the Monitoring the Future survey, that men’s stated willingness to marry has increased since the 1970s. Therefore, all our empirical evidence is fully consistent with the supposition that the additional marriages due to joint custody are the result of increased gains of marriage for men.
Layers of selection into joint custody
Our results clarify the different layers of selection that have to be considered when studying the effect of joint custody on post-divorce (child) outcomes. Firstly, our micro-analysis directly shows that couples with joint custody awards are selected. Secondly, given that joint custody has an impact on the incidence of marriage, additional marriages that would not have occurred under single custody may change the composition of the stock of married couples. These marginal marriages may be of lower match quality. In addition, joint custody may have changed the investment in children within and/or outside marriage.
Like the literature on unilateral divorce law, our empirical analysis can be regarded as a test of the Coase Theorem. Becker, Landes and Michael (1977) argued that if spouses can bargain efficiently, the Coase theorem implies that a change in divorce law only affects the distribution of welfare within marriage, but not the incidence of marriage or divorce.
Equivalently, under a sole custody regime, the right to spend time with the child after divorce is held individually. The introduction of joint custody re-assigns this right to being held jointly. Our results – showing that the incidence of marriage changes – can be interpreted as evidence that spouses may be unable to bargain efficiently over time with the child.
What it means for policy
Finally, our results should be of considerable interest to policymakers. For varying reasons, the public worries about the decline in marriage, and policymakers seek to increase marriage rates. A large number of US polices have been designed to increase the incidence of marriage and to stabilise existing marriages. In the case of joint custody, no attention was given to its potential marriage-promoting effect when it was considered. Our findings are also a first step in understanding which polices can be used to promote marriage.
1 Most of the papers have studied the effects of these laws on divorce rates (Peters, 1986; Allen, 1992; Peters, 1992; Friedberg, 1998; Wolfers, 2006). Other outcome variables are marriage (Rasul, 2006; Matouschek and Rasul, 2008), marriage and fertility (Alesina and Giuliano, 2007; Drewianka, 2008), marriage-specific investments (Stevenson, 2007), female labour supply (Gray, 1998; Genadek, Stock and Stoddard, 2007), various child-outcomes (Gruber, 2004), and domestic violence and suicide (Dee, 2003; Stevenson and Wolfers, 2006).
2 The only paper that has previously examined the impact of custody law on divorce is Brinig and Buckley (1998). They find a negative effect of the introduction of joint custody laws on divorce rates. We are not aware of any attempt to study the impact of custody law on marriage rates.
3 The average number of yearly marriages per 1,000 adults is 17.45 in the sample.
4 Based on micro-level information on 179,997 divorce certificates provided by the National Vital Statistics System of the National Center for Health Statistics for the time period from 1989 through 1995, we show that the probability of a joint custody award increases by three percentage points each year after the introduction of joint custody.
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