The Effects of Household Income Volatility on Divorce

Abstract

A bstract We extend the literature on the effects of earnings shocks on divorce by identifying separately the effects of transitory and permanent household income shocks and by allowing the shocks to have asymmetric effects across education and racial groups. The econometric evidence suggests negative (positive) transitory household income shocks increase (decrease) the probability of divorce, while there is only weak evidence that positive (negative) permanent household income shocks raise (lower) the probability of divorce. Some differences in the effects of household income shocks on divorce propensities arise for subsamples selected by education and race.

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