ESRI Discussion Paper Series No.405 Divorce and Loss of Marital Gains from the Division of Labor: Evidence from a Pension Reform in Japan

Junya Hamaaki

Visiting Researcher, Economic and Social Research Institute, Cabinet Office

Faculty of Economics, Hosei University

Yoshitomo Ogawa

Professor, School of Economics, Kwansei Gakuin University

Abstract

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, where the primary earner continued to receive income through employment-related pensions, 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, enabling them to capture 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, the incidence of divorce rose by 10 to 20% in the year of the reform and the following three years. This finding highlights the important role of marital gains associated with the division of labor in shaping divorce decisions.