Loss of Marital Gains from the Division of Labor and Divorce: Evidence from a Pension Reform in Japan

We examine the impact of Japan’s 2007 pension reform on divorce decisions. Prior to the reform, many Japanese couples maintained a traditional division of labor into old age, with the primary earner generating income through pension benefits, while the spouse contributed through household work. The reform allowed spouses to claim half of the primary earner’s pension contributions accrued during marriage in the event of divorce, allowing them to realize the economic gains of the traditional division of labor without remaining married. Using the reform as a natural experiment, we test the hypothesis that the reduction in these marital gains increased the likelihood of divorce. Our analysis reveals that among couples experiencing the largest reduction in marital gains, incidence of divorce rose by 10 to 20% in a few years after the reform. This finding highlights the important role that marital gains from the division of labor play in shaping divorce decisions.