A Broader View of the Economic Consequences of Divorce

Timothy A. Roeper, CUNY Institute for Demographic Research (CIDR) and Graduate Center, City University of New York (CUNY)
Neil G. Bennett, CUNY Institute for Demographic Research (CIDR)

Several previous studies have compared the economic impact of divorce on women to its impact on men by measuring changes in household income and family size. However, these studies have ignored the impact of assets on economic well-being. The division of assets is an important part of many divorce settlements, and it surely affects one’s level of economic security. We take advantage of household asset information introduced to the Panel Study of Income Dynamics in 1999 to construct a more comprehensive measure of the economic impact of divorce. We compute the ratio of economic well-being at two years prior to the time of divorce to economic well-being two years afterwards. The ratio is compared for women and men and is then decomposed into the contribution to this differential caused by changes in both income and assets on the one hand and by changes in household composition on the other.