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Income Effects of Divorce in Families with Dependent Children

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  • Bratberg, Espen

    ()
    (University of Bergen, Department of Economics)

  • Tjøtta, Sigve

    ()
    (University of Bergen, Department of Economics)

Abstract

Marital splits may affect the economic well-being of families with children significantly. We study the economic effects of divorce in such families in Norway, using administrative information on more than 60,000 individuals. In the typical case, where the mother has custody, the mother (and child) lacks behind before maintenance payments, but after adding these, the outcomes at the median are very similar. However, the median pre-post divorce income reduction is larger for custodial women than for non-custodial men, they have larger risks of an income drop, and larger probabilities of an aggravated position in the income distribution. We also supplement the measures of realized net incomes with an estimate of earnings capabilities. Though not affecting the ranking of the different groups, these calculations indicate that measures based on realized incomes may underrate the well-being of individuals who do not work full-time. The analysis also includes a sensitivity analysis of important parameters in the equivalence scales. An important feature of the Norwegian ”post-divorce package” is that the Government guarantees a minimum level for, and enforces, maintenance payments from the non-custodian to the custodian parent. The system emerges from our analysis as having an equalizing effect on the economic costs of divorce.

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Bibliographic Info

Paper provided by University of Bergen, Department of Economics in its series Working Papers in Economics with number 20/02.

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Length: 27 pages
Date of creation: 15 Nov 2002
Date of revision:
Handle: RePEc:hhs:bergec:2002_020

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Postal: Institutt for økonomi, Universitetet i Bergen, Postboks 7802, 5020 Bergen, Norway
Phone: (+47)55589200
Fax: (+47)55589210
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Web page: http://www.uib.no/econ/en
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Keywords: Marital dissolution; income distribution; income changes; child custody; equivalence scales.;

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References

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  1. Konrad, Kai A & Lommerud, Kjell Erik, 1995. " Family Policy with Non-cooperative Families," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 581-601, December.
  2. Banks, James & Johnson, Paul, 1994. "Equivalence Scale Relativities Revisited," Economic Journal, Royal Economic Society, vol. 104(425), pages 883-90, July.
  3. Jenkins, Stephen P & Cowell, Frank A, 1994. "Parametric Equivalence Scales and Scale Relativities," Economic Journal, Royal Economic Society, vol. 104(425), pages 891-900, July.
  4. Aaberge, Rolf, et al, 2000. " Unemployment Shocks and Income Distribution: How Did the Nordic Countries Fare during Their Crises?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 77-99, March.
  5. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Equivalence Scale Relativities and the Extent of Inequality and Poverty," Economic Journal, Royal Economic Society, vol. 102(414), pages 1067-82, September.
  6. Tjøtta, Sigve & Vaage, Kjell, 2002. "Public Transfers and Marital Dissolution," Working Papers in Economics 08/02, University of Bergen, Department of Economics.
  7. Burkhauser, Richard V, et al, 1990. "Economic Burdens of Marital Disruptions: A Comparison of the United States and the Federal Republic of Germany," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 36(4), pages 319-33, December.
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Cited by:
  1. Datta Gupta, Nabanita & Stratton, Leslie S., 2008. "Institutions, Social Norms, and Bargaining Power: An Analysis of Individual Leisure Time in Couple Households," IZA Discussion Papers 3773, Institute for the Study of Labor (IZA).
  2. Sigve Tjøtta & Kjell Vaage, 2008. "Public transfers and marital dissolution," Journal of Population Economics, Springer, vol. 21(2), pages 419-437, April.
  3. Berntsen, Kjersti Norgård & Kravdal, Øystein, 2012. "The relationship between mortality and time since divorce, widowhood or remarriage in Norway," Social Science & Medicine, Elsevier, vol. 75(12), pages 2267-2274.
  4. Nabanita Datta Gupta & Leslie Stratton, 2010. "Examining the impact of alternative power measures on individual time use in American and Danish couple households," Review of Economics of the Household, Springer, vol. 8(3), pages 325-343, September.

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