The effects of a Danish legal reform on divorce probabilities and pension savings

This paper investigates how a recent Danish legal reform that changed
how pension savings are shared upon divorce influenced divorce probabilities and
pension savings. A simple theoretical model predicts that the reform should cause
couples to either get divorced or sign postnuptial agreements. Using a large panel of
Danish register data, I find that the probability of getting divorced increased by
between 0.1 and 0.3 % for couples that were affected by the reform, compared to
couples that were not. Although these increases might appear small, given that the
average divorce rates for the couples in the sample was less than 1 %, the relative
increase in divorce probabilities caused by the reform was between 12 and 40 %.
The effects are largest when the wife is the one gaining from getting divorced.
Moreover, the reform influenced wives', but not husbands', pension savings and
caused an increase in the number of postnuptial agreements.