Divorce law reform, family stability, and children's long-term outcomes

While divorce laws are known to influence family behavior, empirical evidence of their effects on children remains scarce. I shed more light on this by evaluating the Swedish divorce law reform of 1974, which i) liberalized the existing divorce laws and ii) implemented a 6-month parental reconsideration period for divorce. I exploit quasi-experimental policy variation and population-wide register data of 1.17 million Swedish children born 1952–1964 to evaluate the implications of family (in)stability on children’s long-term human capital outcomes. The evaluation suggests that exposure to more liberal divorce laws decreases the likelihood of graduating from upper secondary school by 5.6%. Evaluating the reconsideration period, I find that families with greater exposure to this reform element are 18.8%less likely to divorce. The exposed children are also 1.8% more likely to graduate from upper secondary school and have more stable marriage market outcomes as adults. The findings highlight a trade-off between parental freedom of choice related to divorce and externalities on children’s outcomes.