Pre-marital homeownership as self-protection against divorce risks: Evidence from China's property division regime change

This paper examines the effect of uninsurable divorce risks on individuals' pre-marital homeownership by using an exogenous shift of the property division regime upon divorce from an equal-division regime to a title-based regime in China. This shift in 2011 aimed at protecting individuals' pre-marital assets, leading singles who worry about divorce risks to purchase a home prior to marriage. We find that singles' probability of owning a house prior to marriage increases by 3.2% in response to a one standard deviation increase in the divorce rate of their residing provinces. This effect is greater for female singles and singles above 30. Furthermore, the effect is stronger for singles with higher incomes, and singles living in the province with higher house prices. The empirical patterns are consistent with singles adopting pre-marital housing as a self-protection mechanism if they perceive great divorce risks after the regime shift in 2011. Our results provide important implications that housing serves not only as a durable consumption or an investment, but also as a self-protection mechanism against uninsurable divorce risks.