Plenty of Fish in the Sea: Divorce Choice and the Quality of Singles

Abstract

In the literature of marriage, divorce choices are usually assumed to not affect the distribution of types in the pool of singles. The scope of the present paper is to overcome this assumption. We analyse divorce choices when separation decision influences the distribution of singles and, thus, their expected quality. We consider a three-period model where heterogeneous individuals may unilaterally experience divorce and return to the marriage market. The choices of individuals are based on the change in the distribution of singles and the cost of waiting and divorcing, taking into consideration the individual’s eligibility in the marriage market. There are two main findings: Firstly, positive assortative matching dissolves with divorce for some intermediate types. Therefore, the endogenous positive assortative matching that usually emerges in models with nontransferable utility is weakened when matches can dissolve. Secondly, the existence of ranges where divorce emerges among individuals with positive assortative matching implies the existence of two disconnected classes of types. If matchings in the first period were to occur between individuals of different classes, such matches would be dissolved later.

Keywords

• non-stationary distribution
• divorce cost
• waiting cost