Understanding the Effects of Marriage and Divorce on Financial Investments: The Role of Background Risk Sharing

Charlotte Christiansen, Juanna Schröter Joensen, Jesper Rangvid

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Abstract

We investigate how changes in marital status affect financial investments and how these effects vary with background risk. We use detailed register-based panel data and difference-in-differences estimators to benchmark common unobserved influences on financial investments. Women increase the fraction of wealth invested in stocks after marriage and decrease it after divorce, whereas men show the opposite behavior. Households whose joint labor income risk is reduced more by marriage have a higher increase in their exposure to risky assets in marriage. Thus income risk sharing in the household is important for financial risk taking and investment responses to marital transitions.
Original languageEnglish
JournalEconomic Inquiry
Volume53
Issue number1
Pages (from-to)431-447
Number of pages17
ISSN0095-2583
DOIs
Publication statusPublished - 2015

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