Will You Miss Me When I Am Gone? The Economic Consequences of Absent Parents

This paper examines the effects of family structure on the economic resources available to children, using family fixed-effects to control for unobservable characteristics of the family. The effects of divorce on the income and consumption of children born to two-parent households, and the effects of marriage on children born into single-parent households are both considered. In the long-run (six or more years after the most recent divorce) family income falls by 40 to 45% after divorce, and food consumption is reduced by 17%. Six or more years after the most recent marriage, income of children born to single parents rises by 50 to 57%, but there is no statistically significant increase in food consumption. These estimates are substantially less than the difference in income implied by cross-sectional comparisons of different family types. When income changes are measured according to time since the parents first divorce, there is substantial recovery in income, virtually all of which is explained by subsequent remarriages. Similarly, when we look at income several years after a parent's first marriage, the gain is 28 to 33%, reflecting the short-lived nature of many of these marriages.