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This paper develops a model of search and learning in marriage markets to analyze how a liberalization of divorce laws affects marriage market outcomes. In particular we analyze how the move from mutual consent divorce to unilateral divorce affects marriage rates, the composition of those who marry, and divorce rates, under the assumption that households cannot reach Coasean bargains. The analysis highlights the distinction between the effects on the existing stock of married couples (a pipeline effect) and the effects on newly married couples (a selection effect). Although unilateral divorce laws increase divorce rates for those already married at the time of the law change, the change to unilateral divorce can cause those married to be better matched than those previously married under mutual consent divorce laws. Hence a change to unilateral divorce can cause a fall in the steady-state divorce rate. The results help interpret and reconcile much of the current empirical literature in this field.
Imran Rasul (Wed,) studied this question.