samlet årgang - Økonomisk Institut - Københavns Universitet

TWO TESTS OF DIVORCE BEHAVIOUR ON DANISH MARRIAGE MARKET DATA 417
Burdett and Coles (1997), and Brien et al. (2001)). This idea of learning about matchspecific
quality is closely related to Jovanovic's (1979) model of job turnover. Thus,
the implications overlap in the sense that the divorce risk – like the exit-rate out of
employment – (eventually) exhibits negative duration dependence. The longer a relationsship
has existed the lower the risk that a break-up will occur. In addition, couples
who started out as cohabitors have the advantage of gathering information about their
partner before marrying. Hence, only good matches should evolve into marriage and
marriages preceeded by cohabitation would have a lower divorce risk.
In the present paper I conduct an empirical test of the two theories of divorce discussed
above. First, I investigate whether couples in which one of the partners experience
deviations from expected earnings are more likely to dissolve. Second, I investigate
whether marriages where the couple cohabited prior to marriage are more likely
to endure. Support for the latter has already been found in Svarer (2004). The contribution
of the current analysis is to test whether this result still holds when the decision
to cohabit is endogenized in the empirical analysis.
The investigation is based on a register based data set collected by Statistics Denmark
covering a subset of all individuals born between January 1, 1955 and January 1,
1965. The individuals are followed from 1980 to 1995 on an annual basis. I find interesting
asymmetries between men and women in terms of the effect of deviations in
actual and expected earnings on divorce risk. Specifically, I find that the divorce risk is
lower (higher) if the husband experience higher (lower) earnings than expected (where
the expectation is based on the outcome of a Mincer earnings regression). On the other
hand, I find that deviations between expected and realised earnings of the wife
destabilize a marriage. With respect to premarital cohabitation, I find that premarital
cohabitation decreases the subsequent divorce hazard. This result is also found in
Svarer (2004). What is new to this study is that it also identifies a positive selection
effect. The selection effect suggests that couples who are more prone to premarital
cohabitation are also more prone to divorce. However, the learning effects, which
enable the partners to learn about the quality of the partnership before marriage, dominate
in terms of sustaining marriage.
The paper is organized as follows. In Section 2 I briefly discuss some theoretical
issues concerning divorce. The data are presented in Section 3. Section 4 contains the
econometric model. In Section 5 I present the results, and in Section 6 I conclude.
2. Theoretical considerations
The theoretical question facing reseachers who want to analyse separations is how it
can be optimal to enter a partnership at one time and then again optimal to leave this
partnership at some later date. In this article I are specifically interested in investigating
this question in the context of the marriage market. Following Burdett and Coles