More or less unmarried. The impact of legal settings of cohabitation on labour market outcomes

Abstract

We study how different levels of protection upon separation affect the labour market behaviour of unmarried cohabiting partners. In Canada, unmarried cohabitation becomes a legal status after one year of relationship. Most provinces automatically expand couples’ rights and responsibilities after several years of cohabitation: some provinces allow cohabiting partners to claim for alimony upon separation, while others consider cohabiting couples to be equal to married couples. Using cross-province variations in legal settings and minimum eligibility duration, we find that eligibility for a regime making cohabiting partners equal to married partners increases men’s labour supply and earnings and decreases women’s while eligibility for a regime allowing for post-separation transfers between ex-partners decreases women’s earnings only. We find that the effect is stronger for couples directly eligible at the time of the reform than for couples who are eligible after the reform and may have anticipated changes in the legal settings. Our results show that eligibility affects within-household allocation of earnings and hours of work, and reinforces existing inequality. Our results contribute to the ongoing public debate regarding the legal recognition and level of protection that should be given to unmarried cohabiting partners.