Changing the Rules Midway: The Impact of Granting Alimony Rights on Existing and Newly Formed Partnerships
Carolina Gonzalez-Velosa provided very useful research assistance. We acknowledge useful comments and suggestions for improvement by the editor, Frederic Vermeulen, two anonymous reviewers, Orazio Attanasio, Valerie Lechene, Derek Neal, Imran Rasul, and at workshops at the University of Chicago, Cornell University, Université Laval, University of Sao Paulo, Universidad de Chile, Essex University, University College London, the Montreal Applied Microeconomics Workshop, SOLE 2013 and Dartmouth College. Pierre-Andre Chiappori gratefully acknowledges financial support by the NSF (Award 1124277), Murat Iyigun thanks NSF for Human and Social Dynamics Grant No: SES-0527751 and Jeanne Lafortune acknowledges Conicyt Programa de Investigacion Asociativa SOC1102 and Fondecyt (Grant Regular No 1150337). All remaining errors are our own.
This article analyses the effect of a reform granting alimony rights to cohabiting couples in Canada. A collective household model with a matching framework predicts that changes in alimony laws would affect existing couples and couples-to-be differently. For existing couples, it benefits the intended beneficiary but, for couples not yet formed, it generates offsetting intra-household transfers and lower intra-marital allocations for the beneficiary. Our empirical analyses confirm these predictions. Among couples united before the reform, obtaining the right to petition for alimony led women to lower their labour force participation but not among newly formed cohabiting couples.