The Effects of Unearned Wealth on Marital and Fertility Outcomes

Abstract
We estimate the effect of large, unearned, financial windfalls on fertility, marriage formation and divorce risk using an administrative data set of Swedish lottery players. Overall, we find a positive medium-run effect on marriage formation and fertility, while the effect on divorce risk is not statistically distinguishable from zero. The totality of the evidence suggests that the effects are often heterogeneous by sex. Wealth effects on fertility and marriage formation are positive and persistent when the winning player is male. In contrast, the effects on women's marriage formation and fertility are not statistically distinguishable from zero. Among female winners who are married, wealth increases short-run, but not long-run, divorce probabilities. This short-run increase in divorce risk is largest in couples who were recently married, whose match quality is predicted to be low and where the husband is the primary breadwinner. Since there is no discernible effect on long-run divorce risk, large unexpected increases in wives' wealth appear to primarily accelerate marital dissolutions already underway, perhaps by reducing women's economic vulnerability outside the marriage. Joint paper with David Cesarini, Robert Östling and Anastasia Terskaya.

Joint with David Cesarini, Robert Östling and Anastasia Terskaya