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Gain and Loss Marriage and Wealth Changes Over Time

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  • Julie Zissimopoulos

Abstract

Family 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.

Suggested Citation

  • Julie Zissimopoulos, 2010. "Gain and Loss Marriage and Wealth Changes Over Time," Working Papers WR-724, RAND Corporation.
    • Handle: RePEc:ran:wpaper:wr-724
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    References listed on IDEAS

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    1. Mincer, Jacob, 1978. "Family Migration Decisions," Journal of Political Economy, University of Chicago Press, vol. 86(5), pages 749-773, October.
    2. Sanders Korenman & David Neumark, 1991. "Does Marriage Really Make Men More Productive?," Journal of Human Resources, University of Wisconsin Press, vol. 26(2), pages 282-307.
    3. David S. Loughran & Julie M. Zissimopoulos, 2009. "Why Wait?: The Effect of Marriage and Childbearing on the Wages of Men and Women," Journal of Human Resources, University of Wisconsin Press, vol. 44(2).
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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure

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