Divorce and the Economy
By: Leah Thomson
Divorce is no light subject; many families have experienced it and many will continue to. Not only does it have an impact on the families themselves, but it also has an impact on the economy. Many factors of divorce build up over time and hurt the economy in more ways than one. Though it is important to focus on how divorce affects families emotionally, it is important to focus on the affect it has on the economy, as well.
A little more than twenty years ago, in 1991, it was shown that after a divorce, women became the victims of a decline in income. In a journal issue from futureofchildren.org, “Financial Impact of Divorce on Children and Their Families” by Jay D. Teachman and Kathleen M. Paasch, a statistic shows that “39% of all divorced women with children and 55% of those with children under six were poor in 1991” (Teachman and Paasch). With decrease in income being a factor of demand, the demand by these families certainly decreased, in turn decreasing demand in the population as a whole. Table 1 below goes on to show that child support makes up 18.5% of the total income of the mother, proving that divorce has a huge impact mostly on the income of the mother.
The article goes on to state that remarriage or reconciliation helps to heal the economic impact that divorce has. Yet, with remarriage rates decreasing, the period between marriages is much longer, resulting in a longer period of poverty. This poverty causes more demand for a job for the mother. With lower incomes, she can no longer provide normal goods for her children and products automatically become far more elastic to her. Although there is more demand, there is less supply; “jobs available to many new entrants into the labor force are often less than full-time employment and/or pay wages below those earned by mothers already in the labor force” (Teachman and Paasch). Since the producers already have workers, they are either less willing to pay money to buy more labor or are only willing to pay the new employees less since they do not need the extra supply. Therefore, divorced mothers continue to live in poverty, thus causing a decrease in economic growth.
However, more recent trends have shown the divorce rate decreasing. In the article “How Divorce Can Adversely Affect the Economy” by Amanda C. Haury, found on Investopia, it is found that the divorce rate is 41%, which is lower than it has been in the past and certainly lower than what some people expect it to be. In the graph shown above, it is depicted that the percentage of households in which the mother is the primary provider has increased from below 10% to 40% from 1960 to 2011. Since more families are becoming dual-income, the divorce rate has decreased, allowing for economic growth to happen. “Healthy marriages have been proved to promote economic growth” (Haury), which alternately means that divorce does exactly the opposite. When a married couple turns into a divorced couple, a house and extra resources that were previously shared becomes needed for each person. Although this may increase the demand for the resources needed, the decrease in income and high price of divorce would drive the divorcees into trying to save their money.
Divorce has a large impact on the economy, and although sometimes it is inevitable, there are ways that people are beginning to prevent it. Getting married at an older age and ensuring financial stability before marriage are solid ways in which couples are attempting to guarantee that they will not get divorced. If the divorce rate continues to decline and families become more dual-income based, the economy will prosper and hopefully steer away from being impacted by divorce.
Haury, Amanda. "How Divorce Can Adversely Affect The Economy." Investopedia. N.p., 7 Nov. 2012. Web. 14 Mar. 2014. <http://www.investopedia.com/financial-edge/1112/how-divorce-can-adversely-affect-the-economy.aspx>.
Teachman, Jay, and Kathleen Paasch. "The Future of Children, Princeton - Brookings: Providing research and analysis to promote effective policies and programs for children.." - The Future of Children -. N.p., n.d. Web. 14 Mar. 2014. <http://futureofchildren.org/publications/journals/article/index.xml?journalid=63&articleid=411§ionid=2802>.