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Family Size and Economic Wellbeing following Divorce: The United States in Comparative Perspective

a study with Thomas Leopold published in Social Science Research


Extensive research has been conducted on both the causes and consequences of marital separation. A ubiquitous finding across decades of research is that divorce is negatively associated with women’s economic wellbeing. Specifically, divorce has been shown to decrease women’s household incomes and increase their risk of poverty.


Women’s economic hardship following divorce and its deleterious consequences have always been closely associated with the presence of children. The presence of children, who most commonly reside with their mothers after divorce is a major obstacle to economic recovery, because children increase the economic needs of the household, limit women’s human capital investments and labor supply, and involve direct costs of childrearing that are often not compensated by alimony and child maintenance.


Although it is universally acknowledged that the economic and social consequences of divorce crucially depend on whether and how many children are involved, empirical knowledge about such differences remains scarce. With the current study, we present a comprehensive assessment of how the short-term and medium-term economic consequences of divorce vary by family size.


Family size not only determines women’s economic needs and pathways to economic recovery after divorce, but also how many children are negatively affected by financial hardship. This means that the relevance of family size is twofold: Larger families are more vulnerable to the economic consequences of divorce and larger families include more children exposed to these consequences.


The association between divorce and economic wellbeing varies considerably across countries, due to differences in spousal and child maintenance regulations, in women’s earnings and re-partnering behavior, but also income-related and employment-related policies that mitigate the short-term economic consequences of divorce for women. In light of these policy perspectives and related empirical findings, we added a comparative view to our study of the US context.


Data & Methods

We used data from the US Panel Study of Income Dynamics (PSID 1970-2015) included in the Cross-National Equivalent File (CNEF) to analyze how women’s economic wellbeing changed following divorce. From the other CNEF countries, we added data from Germany (GSOEP 1984-2014), the UK (BHPS 1991-2008), and Australia (HILDA 2001-2015). A full description can be found in the published article. A replication package can be found here.


As our outcome measure of economic wellbeing, we concentrated on the natural log of gross family income. Annual gross household income was calculated as the sum income of all household members from labor earnings, asset flows, retirement income, private transfers, and social security pensions. Private transfers included alimony, child support, and other income from non-household members.


To examine both initial and medium-term changes following divorce, we included both a binary and a continuous indicator for divorce. Our binary indicator took the value of zero when women were married and one when women were divorced. The continuous indicator counted the number of years following divorce and was zero during marriage and in the year of divorce. When these variables were simultaneously included in the regression models, the binary indicator captured the initial change following the transition to divorce and the continuous indicator captured changes after the year of divorce.


Family size was measured as the number of children in the household in the year of divorce categorically as either no children, one child, two children, or three or more children. For individuals who did not divorce, family size was measured as the maximum number of children observed in the household.


We used between-within random effects linear regression models to estimate 1) how women’s incomes change in the short and mid-term following divorce by family size and 2) how the income gap between women with and without children change in the short and mid-term following divorce. We also estimate family size differences once adjusted by two main coping strategies above: working hours and remarriage.


Results

Panel A of Figure 1 shows the percent change in gross household income for childless women and mothers with one, two, and three or more children one year prior to divorce and six years after it in the United States. The estimated difference in women’s household incomes with one, two, and three or more children relative to childless women’s households are depicted in panel B.


Figure 1: Change in Gross Household Income by Family Size

A)

B)


The results highlight the important of differentiating between the number of children in divorced women’s households. The short-term change in household income following divorce is similar for childless women and mothers with one and two children (see panel A of Figure 1). For these women, household incomes initially dropped by roughly 60 percent. However, the household incomes of women with three or more children decreased by approximately 70 percent. This translated into a sharp increase in the difference in the economic wellbeing of mothers with three or more children and childless women (see panel B of Figure 1). While the household incomes of women with many children were circa 30 percent lower than the household incomes of childless women one year prior to divorce, that differences increased by to 50 percent in the year of divorce. However, while childless women’s incomes stay stagnant in the years following divorce, women with three or more children do recuperate to a small degree from approximately 70 percent to 65 percent relative to one year prior to divorce. Women with one or two children also recuperate to a small degree.


We additionally estimated analyses separately adjusting for remarriage and the number of work hours– two of the most important pathways to recovery following divorce – by family size. This allows us to gain leverage on whether these pathways assist women’s economic recovery differently by family size. The results of these analyses are displayed in Figure 2 for remarriage and Figure 3 for work hours. If remarriage or working hours account for family size differences in post-divorce economic wellbeing, then we should see smaller family size differences in Figures 2 and 3 compared to Figure 1.


Figure 2: Change in Gross Household Income by Family Size Adjusted for Remarriage

A)


B)


As can be seen in Figure 2, adjusting our results for remarriage had only a modest impact on our estimates. As would be expected, we still found that the short-term association between divorce and households income was largest for women with three or more children (ca. 75 percent) compared to childless women and mothers with one or two children (ca. 65 percent). In addition, we still found that divorce widened the gap between divorced women’s household with many children and those with few or no children (from ca. 30 to 50 percent). In sum, our results did not indicate that remarriage played a mediating role in family size differences following divorce.


Figure 3: Change in Gross Household Income by Family Size Adjusted for Working Hours

A)

B)


We did however find evidence that the degree of labor market attachment plays a role if family size differences in economic wellbeing following divorce. Once adjusted for working hours, we find important differences (see Figure 3). While the short-term decrease in household income following divorce is still substantial for all family sizes (ca. 65 percent for mothers with one or two children, 70 percent for childless women, and 75 percent for women with three or more children), the difference between childless women and mothers with three or more children is no longer exacerbated considerably by divorce, growing from roughly 15 to 25 percent. In contrast with our unadjusted results, which showed only negligible differences between childless women and mothers with few children, we found that mothers’ household incomes are roughly 15 to 20 percent higher than the incomes of childless women.


Figure 4: Change in Gross Household Income by Family Size across Countries

A)

B)


Similar to the US, our results underscore the importance of focusing on family size differences in all our study countries (see Figure 4). In both Germany and the UK, mothers with three or more children suffer considerably larger losses directly following divorce compared to childless women and women with one or two children. For example, in the UK the household incomes of mothers with three or more children decrease by 90 percent compared to pre-divorce levels, compared to 80 percent for mothers with two children and under 70 percent for mothers with only a single child. In these two countries, divorce considerably increases the economic gap between divorced women’s households by family size. For example, in Germany mothers with three or more children have roughly 30 percent lower household incomes relative childless households prior to divorce. However, that gap widens to nearly 90 percent following divorce. In Germany, only the gap between households of mothers with one child and childless women’s households dissipates within six years of divorce. The household incomes of divorced mothers recuperate in the medium term and mothers with one or two children have higher household incomes than childless women within six years. In Australia, family size differences in the short-term impact of divorce remain small, with mothers affect slightly less than childless women, however especially mothers with two or more children recuperate in the medium-term and eventually the household incomes of divorced mothers become higher than those of childless women.


Figure 5: Change in Gross Household Income by Family Size across Countries Adjusted for Remarriage

A)

B)


Figure 6: Change in Gross Household Income by Family Size across Countries Adjusted for Working Hours

A)

B)


As can be seen in Figure 5, the family size differences found in Germany, the UK, and Australia remain once adjusted for remarriage. However similar to our results for the US, family size differences decrease in all countries once the number of working hours is taken into account (see Figure 6). For example, in Germany the household incomes of women without children as well as mother with few and many children decreases considerably by roughly 70 percent. However, we no longer find that divorce widens the economic gap between households with childless women and mother’s households. In contrast, we find that once adjusted for working hours, the household incomes of mothers with children tend to be larger than those of childless women’s households in the years following divorce.


Conclusion

Our results provide additional evidence that divorce is related to a substantial initial drop in economic wellbeing. However, our main contribution to the literature was to show how motherhood status and family size moderated the short-term and medium-term association between divorce and women’s economic wellbeing following divorce. In line with expectations, we found that the short-term negative effects of divorce on gross household income increased with family size in most contexts. In contrast to expectations, however, these family size differences tended to decrease or dissipate in the medium-term in most contexts.


The finding of faster economic recovery mother’s households is surprising, but our results also pointed towards potential explanations in terms of different barriers to women’s employment and remarriage following divorce. Specifically, our results demonstrated that women with children at the time of divorce increase their work intensity substantially in the years following divorce, which accounts for a considerable proportion of family size differences in the economic consequences of divorce. While women without children at the time of divorce are more likely to remarry, we found no evidence that this accounts for any of the family size differences we observed.


Although countries differ with regard to the size of the initial association between divorce and economic wellbeing as well as the rate of recovery, cross-national similarities in family size differences are striking. In all countries, women without children did not recover from the economic losses associated with divorce, whereas women with children tended to partially recover in the medium term. The initial association between divorce and poverty was strongest and most stratified by family size in Germany and the UK and smallest and least stratified by family size in Australia and to a lesser extent the US. Women with children tended to fully recovered in Australia and the UK. Our results indicate that the association between divorce and economic wellbeing is a persistent for childless women in these all countries, whereas it tends to be shorter lived for women with children. In Germany and to a less extent the US, the impact of divorce for women with children at best reached the level of women without children towards the end of the observation window. In these countries, however, substantial losses in economic wellbeing were persistent for all family sizes.


Children who experience divorce and the economic consequences following divorce often suffer from problems, such as deviance and health problems, reduced educational and occupational attainment, and barriers to social mobility. Therefore, the presence of children turns divorced women’s economic hardship into a major social problem. As we have shown, larger families are more vulnerable to the short-term economic consequences of divorce in terms of falling into poverty, which in turn means that more children are exposed to these consequences in larger families.

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