IDEAS home Printed from https://ideas.repec.org/p/wiw/wiwrsa/ersa13p250.html
   My bibliography  Save this paper

Not always for richer or poorer: The effects of income shocks and house price changes on marital dissolution

Author

Listed:
  • Harminder Battu
  • Heather Brown
  • Miguel Costa-Gomes

Abstract

There has been much informal speculation on how changes in economic circumstances contribute to partnership dissolution; however there has been little empirical work testing these speculations. This paper aims to shed light on how micro level factors such as receiving a financial windfall and changes in investment income as well as macro level changes such as changes in house prices at the regional level impact on the likelihood of divorce. We use information from 18 waves (1991-2008) of the British Household Panel Survey. The long panel allows us to control for both upturns and downturns in the economic cycle. The estimation strategy employs a discrete time duration model. The results suggest that windfalls and changes in investment income may be pathways through which financial surprises or new information impacts on the likelihood of partnership dissolution. Specifically we find a positive and significant effect on partnership dissolution of a wife receiving an inheritance and a husband having a positive change in his income from interests and dividends. This finding is consistent with much of the theoretical literature suggesting a positive shock will reduce the benefits of the current marriage and increase the likelihood of an individual finding a 'better' partner. Interaction models for changes in regional house prices and housing tenure show a small positive significant increase in the likelihood of divorce for couples in mortgaged property and private rented accommodation when house prices rise by 1% compared to those in social housing. A rise in house prices for couples with mortgages may increase the pay-offs for divorce reducing the returns to remaining in the current partnership. For couples, in private rented accommodation, a rise in house prices may signify an inability to get on the housing ladder reducing the benefits of the current partnership leading individuals to seek a partner with more capital or a homeowner.

Suggested Citation

  • Harminder Battu & Heather Brown & Miguel Costa-Gomes, 2013. "Not always for richer or poorer: The effects of income shocks and house price changes on marital dissolution," ERSA conference papers ersa13p250, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa13p250
    as

    Download full text from publisher

    File URL: https://www-sre.wu.ac.at/ersa/ersaconfs/ersa13/ERSA2013_paper_00250.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Rainer, Helmut & Smith, Ian, 2008. "Staying together for the sake of the home? House price shocks and partnership dissolution in the UK," ISER Working Paper Series 2008-31, Institute for Social and Economic Research.
    2. Helmut Rainer & Ian Smith, 2010. "Staying together for the sake of the home?: house price shocks and partnership dissolution in the UK," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 173(3), pages 557-574, July.
    3. Betsey Stevenson & Justin Wolfers, 2007. "Marriage and Divorce: Changes and their Driving Forces," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 27-52, Spring.
    4. Harminder Battu & Ada Ma & Euan Phimister, 2008. "Housing Tenure, Job Mobility and Unemployment in the UK," Economic Journal, Royal Economic Society, vol. 118(527), pages 311-328, March.
    5. Weiss, Yoram & Willis, Robert J, 1997. "Match Quality, New Information, and Marital Dissolution," Journal of Labor Economics, University of Chicago Press, vol. 15(1), pages 293-329, January.
    6. 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 1141-1187, December.
    7. Edward C. Norton & Hua Wang & Chunrong Ai, 2004. "Computing interaction effects and standard errors in logit and probit models," Stata Journal, StataCorp LP, vol. 4(2), pages 154-167, June.
    8. Lee Lillard & Linda Waite, 1993. "A joint model of marital childbearing and marital disruption," Demography, Springer;Population Association of America (PAA), vol. 30(4), pages 653-681, November.
    9. Rene Boheim & John Ermisch, 2001. "Partnership Dissolution in the UK – the Role of Economic Circumstances," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(2), pages 197-208, May.
    10. Kerwin Kofi Charles & Melvin Stephens, 2004. "Job Displacement, Disability, and Divorce," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 489-522, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Jiaping Zhang & Mingwang Cheng & Xinyu Wei & Xiaomei Gong, 2018. "Does Mobile Phone Penetration Affect Divorce Rate? Evidence from China," Sustainability, MDPI, vol. 10(10), pages 1-19, October.
    2. Pierre–André Chiappori & Natalia Radchenko & Bernard Salanié, 2018. "Divorce and the duality of marital payoff," Review of Economics of the Household, Springer, vol. 16(3), pages 833-858, September.
    3. Mingbo Zheng & Yin E Chen & Gen-Fu Feng & Jun Wen & Chun-Ping Chang, 2018. "Divorce And Housing Price In 31 Provinces Of China," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 21(2), pages 161-176, October.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jennifer Klein, 2017. "House Price Shocks and Individual Divorce Risk in the United States," Journal of Family and Economic Issues, Springer, vol. 38(4), pages 628-649, December.
    2. Pierre–André Chiappori & Natalia Radchenko & Bernard Salanié, 2018. "Divorce and the duality of marital payoff," Review of Economics of the Household, Springer, vol. 16(3), pages 833-858, September.
    3. Guven, Cahit & Senik, Claudia & Stichnoth, Holger, 2012. "You can’t be happier than your wife. Happiness gaps and divorce," Journal of Economic Behavior & Organization, Elsevier, vol. 82(1), pages 110-130.
    4. Marcus Eliason, 2012. "Lost jobs, broken marriages," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(4), pages 1365-1397, October.
    5. Daniel Avdic & Arizo Karimi, 2018. "Modern Family? Paternity Leave and Marital Stability," American Economic Journal: Applied Economics, American Economic Association, vol. 10(4), pages 283-307, October.
    6. Laurens Cherchye & Bram De Rock & Frederic Vermeulen & Selma Walther, 2021. "Where did it go wrong? Marriage and divorce in Malawi," Quantitative Economics, Econometric Society, vol. 12(2), pages 505-545, May.
    7. Delia Furtado & Miriam Marcén & Almudena Sevilla, 2013. "Does Culture Affect Divorce? Evidence From European Immigrants in the United States," Demography, Springer;Population Association of America (PAA), vol. 50(3), pages 1013-1038, June.
    8. Shelly Lundberg, 2012. "Personality and marital surplus," IZA Journal of Labor Economics, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 1(1), pages 1-21, December.
    9. Jiaping Zhang & Mingwang Cheng & Xinyu Wei & Xiaomei Gong, 2018. "Does Mobile Phone Penetration Affect Divorce Rate? Evidence from China," Sustainability, MDPI, vol. 10(10), pages 1-19, October.
    10. Evelyn Lehrer & Yu Chen, 2013. "Delayed entry into first marriage and marital stability," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 29(20), pages 521-542.
    11. Robert Nakosteen & Michael Zimmer, 2017. "Marriage dissolution among American men, 2003–2010: The roles of measured earnings and latent selection," Cogent Economics & Finance, Taylor & Francis Journals, vol. 5(1), pages 1348327-134, January.
    12. Yukichika Kawata, 2008. "Does High Unemployment Rate Result in a High Divorce Rate?: A Test for Japan," Revista de Economía del Rosario, Universidad del Rosario, November.
    13. Melissa Ruby Banzhaf, 2018. "When It Rains, It Pours: Under What Circumstances Does Job Loss Lead to Divorce," Southern Economic Journal, John Wiley & Sons, vol. 85(2), pages 349-377, October.
    14. Mohammad Reza Farzanegan & Hassan Fereidouni Gholipour, 2016. "Divorce and the cost of housing: evidence from Iran," Review of Economics of the Household, Springer, vol. 14(4), pages 1029-1054, December.
    15. Shelly Lundberg, 2011. "Psychology and Family Economics," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 12(s1), pages 66-81, May.
    16. Jessamyn Schaller, 2013. "For richer, if not for poorer? Marriage and divorce over the business cycle," Journal of Population Economics, Springer;European Society for Population Economics, vol. 26(3), pages 1007-1033, July.
    17. Perry Singleton, 2012. "Insult to Injury: Disability, Earnings, and Divorce," Journal of Human Resources, University of Wisconsin Press, vol. 47(4), pages 972-990.
    18. John M. Nunley & Alan Seals, 2010. "The Effects of Household Income Volatility on Divorce," American Journal of Economics and Sociology, Wiley Blackwell, vol. 69(3), pages 983-1010, July.
    19. Svarer, Michael & Verner, Mette, "undated". "Do Children Stabilize Marriages?," Economics Working Papers 2003-3, Department of Economics and Business Economics, Aarhus University.
    20. Ayako Kondo, 2012. "Gender-specific labor market conditions and family formation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 25(1), pages 151-174, January.

    More about this item

    Keywords

    Housing; Homeownership; Labour markets; Marital Status;
    All these keywords.

    JEL classification:

    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wiw:wiwrsa:ersa13p250. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Gunther Maier (email available below). General contact details of provider: http://www.ersa.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.