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Job Displacement, Disability, and Divorce

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  • Kerwin Kofi Charles
  • Melvin Stephens Jr.

Abstract

This paper examines how job displacement and physical disability suffered by a spouse affects the probability that the person's marriage ends in divorce. According to the standard economic model of marriage, the arrival of new information about a partner's earning capacity that a negative earnings shock conveys might affect the gains that the couple believes it will receive from remaining married. Shocks may therefore affect divorce probability. Little previous work has explored this issue. The few efforts that exist use no explicit measures of earning shocks. Using the Panel Study of Income Dynamics, this paper finds an increase in the probability of divorce following a spouse's job displacement but no change in divorce probability after a spousal disability. This difference casts doubt on a purely pecuniary motivation for divorce following earnings shocks, since both types of shocks exhibit similar long-run economic consequences. Furthermore, the increase in divorce is found only for layoffs and not for plant closings which suggests that information conveyed about a partner's non-economic suitability as a mate due to a job loss may be more important than the financial losses in precipitating a divorce.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 8578.

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Date of creation: Nov 2001
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Publication status: published as Charles, Kerwin Kofi and Melvin Stephens. “Disability, Job Displacement and Divorce." Journal of Labor Economics 22, 2 (April 2004): 489—522.
Handle: RePEc:nbr:nberwo:8578

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  1. John Bound & Michael Schoenbaum & Todd R. Stinebrickner & Timothy Waidmann, 1998. "The Dynamic Effects of Health on the Labor Force Transitions of Older Workers," NBER Working Papers 6777, National Bureau of Economic Research, Inc.
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  3. Becker, Gary S, 1974. "A Theory of Marriage: Part II," Journal of Political Economy, University of Chicago Press, vol. 82(2), pages S11-S26, Part II, .
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  5. Mark Bagnoli & Ted Bergstrom, . "Courtship as a Waiting Game," Papers _030, University of Michigan, Department of Economics.
  6. Stevens, Ann Huff, 1997. "Persistent Effects of Job Displacement: The Importance of Multiple Job Losses," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 165-88, January.
  7. Peters, H Elizabeth, 1993. "The Importance of Financial Considerations in Divorce Decisions," Economic Inquiry, Western Economic Association International, vol. 31(1), pages 71-86, January.
  8. Robert Gibbons & Lawrence Katz, 1989. "Layoffs and Lemons," Working Papers 629, Princeton University, Department of Economics, Industrial Relations Section..
  9. Steven Stern, 1989. "Measuring the Effect of Disability on Labor Force Participation," Journal of Human Resources, University of Wisconsin Press, vol. 24(3), pages 361-395.
  10. Chamberlain, Gary, 1984. "Panel data," Handbook of Econometrics, in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 22, pages 1247-1318 Elsevier.
  11. Becker, Gary S & Landes, Elisabeth M & Michael, Robert T, 1977. "An Economic Analysis of Marital Instability," Journal of Political Economy, University of Chicago Press, vol. 85(6), pages 1141-87, December.
  12. Kenkel, D.S., 1988. "Health Behavior, Health Knowledge, And Schooling," Papers 10-88-3, Pennsylvania State - Department of Economics.
  13. John Bound, 1991. "Self-Reported Versus Objective Measures of Health in Retirement Models," Journal of Human Resources, University of Wisconsin Press, vol. 26(1), pages 106-138.
  14. Cullen, Julie Berry & Gruber, Jonathan, 2000. "Does Unemployment Insurance Crowd Out Spousal Labor Supply?," Journal of Labor Economics, University of Chicago Press, vol. 18(3), pages 546-72, July.
  15. Melvin Stephens Jr., 2001. "Worker Displacement and the Added Worker Effect," NBER Working Papers 8260, National Bureau of Economic Research, Inc.
  16. Melvin Stephens, 2001. "The Long-Run Consumption Effects Of Earnings Shocks," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 28-36, February.
  17. Maddala,G. S., 1986. "Limited-Dependent and Qualitative Variables in Econometrics," Cambridge Books, Cambridge University Press, number 9780521338257, April.
  18. Johnson, William R & Skinner, Jonathan, 1986. "Labor Supply and Marital Separation," American Economic Review, American Economic Association, vol. 76(3), pages 455-69, June.
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