Household structure decisions and positive wealth shocks: a natural experiment from the Spanish Christmas lottery

Abstract

Abstract This paper explores whether a positive unexpected exogenous (unearned) wealth shock affects household structure decisions in different Spanish regions. The Christmas draw of the Spanish National Lottery is used in a natural experiment as a proxy for exogenous random variations in provincial wealth. A static and dynamic linear panel event-study design allows for control of changing economic and demographic conditions at the province level and the dynamic effects on the analyzed decisions. The evidence is consistent with families getting divorced and having children when the province in which they live experiences an unexpected increase in wealth, but no conclusive effect on wedding plans is found.