DP9081 Can Pro-Marriage Policies Work? An Analysis of Marginal Marriages

Author(s): Wolfgang Frimmel, Martin Halla, Rudolf Winter-Ebmer
Publication Date: August 2012
Keyword(s): divorce, fertility, marital instability, marriage subsidies, Marriage-promoting policies
JEL(s): H24, H53, I38, J12
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=9081

Policies to promote marriage are controversial, and it is unclear whether they are successful. To analyze such policies, it is essential to distinguish between a marriage that is created by a marriage-promoting policy (marginal marriage) and a marriage that would have been formed even in the absence of a state intervention (average marriage). In this paper, we exploit the suspension of a cash-on-hand marriage subsidy in Austria to examine the differential behavior of marginal and average marriages. The announcement of this suspension led to an enormous marriage boom (plus 350 percent) among eligible couples that allows us to identify marginal marriages. Applying a difference-in-differences approach, we show that marginal marriages are surprisingly as stable as average marriages, but have fewer children and have them later in marriage. Notably, the children born to marginal marriages are similar in terms of health at birth.