The Effect on Divorce of Legislated Net-Wealth Transfers

The Effect on Divorce of Legislated Net-Wealth Transfers

The Effect on Divorce of Legislated Net-Wealth Transfers

The Effect on Divorce of Legislated Net-Wealth Transferss

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Référence bibliographique [2794]

Journal of Law, Economics, and Organization, vol. 23, no 3, p. 580-597.

Fiche synthèse

1. Objectifs

Intentions :
« This article examines a particular type of guideline—child support—and argues that when the assignments of dollars of support are out of line with the costs of children, then there can be changes in divorce behavior in an attempt to capture the legislated wealth transfer. This article focuses on Canada’s recent changes in child support guidelines because their design creates the opportunity for significant wealth transfers and therefore provides an opportunity to test the hypotheses of the study. » (pp. 580-581)

2. Méthode

Échantillon/Matériau :
- Survey of Labour Income Dynamics (SLID)
- « For this study, individuals were selected year by year from the panel (starting with the most recent year) if they were married or living commonlaw on January 1 of that year and remained married throughout the year or if they were married or living common-law on January 1 of that year but became separated during the year. Individuals were selected only if they were married one time. » (p. 590)

Type de traitement des données :
Analyse statistique

3. Résumé

« In recent years, legislatures have imposed several types of guidelines restricting court discretion. Guidelines designed around ‘average’ cases, however, can lead to problems for ’nonaverage’ situations. In the context of divorce, poorly designed child support guidelines may create an opportunity for a netwealth transfer in excess of the costs of children for ’nonaverage’ families and therefore create an incentive to divorce. This incentive to divorce, when coupled with the ability to divorce under no-fault laws, may lead to higher divorce rates for certain classes of couples. This article exploits the 1997 Canada Child Support Guidelines to test the divorce prediction using data from the Survey of Labour Income Dynamics. I find separation rates increase after implementation of the Guidelines among couples with income of $25,000 per year. » (p. 580) The article is related to Quebec because the province is used as a control variable in the study since it shows higher separation rates than other Canadian provinces.