Relationship between Housing Price and Divorce via an Unexpected Size-Based Policy Change

This paper studies the impact of housing wealth shocks on marital stability, focusing on divorce outcomes. Exploiting a natural experiment from China's 90-square-meter housing policy, I apply a regression discontinuity design (RDD) to identify causal effects of house wealth and divorce. Results show that positive housing shocks increase the likelihood of divorce, particularly among households with children and higher education levels. Event-study analyses reveal no significant shifts in non-housing consumption after divorce, suggesting that housing gains cushion the financial costs of separation. The findings complement traditional models of marriage as labor contracts by highlighting the role of asset appreciation.