Prenups

In the 1970s a “unilateral divorce revolution” swept the United States. Economists have closely studied and frequently debated the effect of this revolution on divorce rates in America. Perhaps because of this, the fact that just a decade later a second, and potentially equally important, divorce-law revolution swept America escaped economists’ attention: the “prenuptial enforcement revolution.” Before the mid-1980s prenuptial agreements had tenuous legal standing in US state courts, which often refused to enforce them. In 1983 the National Conference of Commissioners on Uniform State Laws promulgated legislation called the Uniform Premarital Agreement Act designed to strengthen these agreements’ legal enforcement. Since then 26 states and the District of Columbia have adopted this legislation, rendering prenuptial contracts reliably enforceable in their courts. The authors use data on prenuptial agreements’ enforceability from 1956 to 2009 to investigate the effect of making prenuptial agreements enforceable on divorces rate in America. Their identification strategy considers both the political endogeneity of prenuptial-agreement reform and the dynamic response of divorce rates to this policy shock. They find that rendering prenuptial agreements legally enforceable reduced divorce rates in America and that this reduction was permanent. Further, we find that most of the reduction in divorce rates the “prenuptial enforcement revolution” achieved occurred in states that adopted unilateral divorce during the “unilateral divorce revolution.” Their results suggest that strengthening prenups’ enforcement has strengthened the institution of marriage in the United States.