A Couple of Issues
The Optimal Taxation of Couples
Mikhail Golosov & Ilia Krasikov
Quarterly Journal of Economics, forthcoming
Abstract:
We study optimal nonlinear taxation of single and married households. Taxes on couples depend on the earnings of both spouses and are an example of multidimensional tax schedules. We develop novel analytical techniques to study properties of such taxes. We show that the optimal marginal taxes for married individuals are generally lower than for single individuals because resource sharing in couples provides socially valuable redistribution. Under realistic assumptions, the optimal tax rates for married individuals increase with the correlation of spousal earnings, the marginal tax rates for one spouse increase (decrease) in the earnings of the other if both spouses have low (high) earnings, and the primary earner faces lower marginal taxes than the secondary earner.
From Fault to Freedom: How No Fault Divorce Laws Impacted the U.S. College Divorce Divide
Jordan Peeples
University of Pennsylvania Working Paper, April 2025
Abstract:
This paper examines the divergence in divorce rates observed since the 1980s, characterized by increasing rates among non-college-educated women and decreasing rates among college-educated women. I document that the divergence can mainly be attributed to spouses with heterogeneous education levels. Despite expectations that rising wages would disproportionately lower the marginal value of marital consumption for college-educated women, this trend points to other underlying factors. Using data from the SIPP, PSID, NCHS, and a newly conducted survey via ResearchMatch, I document the impact of no fault divorce laws for grounds and property on divorce rates by education group. I find that these legal reforms, which began proliferating in the 1970s, can account for most of the divergence by eliminating the requirement to prove fault for divorce and preventing fault from serving as a factor in property division. To determine the impact of incorporating a fault-based pathway in the traditional method of modeling mutual consent on the divorce trends in heterogeneous marriages, I compare the mutual consent regime and unilateral divorce regime in a four-period life cycle model of endogenous marriage and divorce decisions with exogenous wage, education, age at first marriage, and fertility patterns. I find that switching between these two regimes with the proposed mechanisms can explain approximately 37% of the divide among heterogeneous marriages for the 1980 marital cohort.
The impact of access to legal services on divorce outcomes
Melanie Zaber, Jessie Coe & Marwa AlFakhri
Review of Economics of the Household, June 2025, Pages 763-795
Abstract:
A long literature has established that divorce is an important channel for married individuals to escape unhealthy circumstances. The complexity and high personal stakes of divorce may mean that true access to divorce hinges on access to legal services. Leveraging variation in access to legal services across geography and over time, we estimate the impact of this access on divorce in the United States. Using data from the Legal Services Corporation on legal service provision by geographic area and data from the American Community Survey on divorce and household income, we find that having access to legal services in a given year leads to an additional 2.5 to 3.5 divorces per 1000 income-eligible individuals, an approximately 7 to 9 percent increase in divorce. This magnitude is on par with historical work on the rollout of the first national legal services program. The identified effect is robust to several controls, is not driven purely by spatial variation in divorce rates, and is not sensitive to alternative specifications. These findings underscore the importance of access to legal services in civil contexts.
Juggling Priorities: Women's Labor Market Opportunities and Household Consumption
Yu Kyung Koh & So Yoon Ahn
University of Chicago Working Paper, January 2025
Abstract:
How do women's relative labor market opportunities affect household consumption for married couples? While higher potential wages can enhance women's bargaining power, shifting consumption toward their preferences, they may increase work hours, altering time constraints and spending. Using exogenous gender-specific wages and scanner data, we find higher female relative wages increase spending on convenience foods and decrease spending on fresh produce, contributing to higher obesity rates. This is primarily driven by women's time reallocation given their disproportionate domestic responsibilities. Our findings suggest that the impacts of earned female income may differ from those of unearned income found in previous studies.
Information Spillovers within Couples: Evidence from a Sequential Survey of Spouses
Adeline Delavande, Gizem Koşar & Basit Zafar
NBER Working Paper, May 2025
Abstract:
Little is known about the extent and drivers of information flow within couples, and whether spouses hold aligned expectations about the same outcomes. To provide new evidence, we conduct an online survey of 2,200 middle-aged married couples in the US. Our focus is on expectations about Social Security benefits. We first document misalignment in expectations: the correlation between partners' beliefs about a given spouse's Social Security benefits is 0.70, well below full agreement. We also show that this imperfect alignment is systematically associated with couple-specific characteristics. To establish causal evidence on information spillovers, we implement a randomized information experiment paired with a sequential survey design, where the index spouse receives targeted information, and the other is surveyed a few days later. Our findings reveal that information provided to the index spouse partially spills over to their partner, with the average treatment effect on the second spouse's expectations being about half that observed for the index spouse. Using detailed survey data on measures of communication frictions, cognitive barriers, and the value of information, we identify key drivers of information flow. Spillovers are larger when communication barriers are low and when the information is particularly valuable. We also show that the information treatment enhances conditions for better intra-household decision-making. Overall, our findings highlight the importance of incorporating realistic communication frictions into models of household decision-making.