Gain and Loss: Marriage and Wealth Changes Over Time
AbstractFamily composition has changed dramatically over the past 25 years. Divorce rates increased and remarriage rates declined. While considerable research established a link between marriage and earnings, far less is empirically understood about the effect of marriage on wealth although wealth is an important measure for older individuals because it represents resources available for consumption in retirement. This research employs eight waves of panel data from the Health and Retirement Study to study the relationship between wealth changes and marital status among individuals over age 50. It advances understanding of the relationship by first, incorporating measures of current and lifetime earnings, mortality risk and other characteristics that vary by marital status into models of wealth change; second, measuring the magnitude of wealth loss and gain associated with divorce, widowing and remarriage and third, estimating wealth change before and after marital status change so the change in wealth change is not the result of individuals entering or leaving the household and other sources of unobserved differences are removed from estimates of the effect of marriage on wealth. The results suggest no differences in wealth change over time among individuals that remain married, divorced, widowed, never married and partnered over 7 years. In the short-run there are substantial wealth changes associated with marital status changes. Divorce at older ages is costly, remarriage is wealth enhancing and people appear to change their savings in response to changes in marital status.
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Bibliographic InfoPaper provided by RAND Corporation Publications Department in its series Working Papers with number 724.
Length: 29 pages
Date of creation: Dec 2009
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Other versions of this item:
- Julie M. Zissimopoulos, 2009. "Gain and Loss: Marriage and Wealth Changes Over Time," Working Papers wp213, University of Michigan, Michigan Retirement Research Center.
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
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- Christopher Tamborini & Howard Iams & Gayle Reznik, 2012. "Women’s Earnings Before and After Marital Dissolution: Evidence from Longitudinal Earnings Records Matched to Survey Data," Journal of Family and Economic Issues, Springer, vol. 33(1), pages 69-82, March.
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