Friday, March 28, 2014

Divorce and the Economy

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.



Works Cited

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>.

29 comments:

  1. It was very interesting to find out that divorce could both help and hurt the economy but it tends to hurt the economy more than help it. "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." This quote directly from your passage brings new insight as to how much divorce will hurt the economy by divorced couples trying to save their money. This then will hurt the economy because people are not going to be spending as frequently as others will.

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  2. The amount of divorces has increases quite a bit over the last few decades and it does seem to have a very large impact on our economy because the price of divorce has increased so it has a bit of a negative effect on our economy.

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  3. This was a very interesting article. I never knew how much of an impact divorce had on a single mother. Because of the divorce, it’s not surprising that women have more trouble getting the certain food that their child needs, which will have an adverse affect on how the child develops. “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”, from the article, which should help divorce by having a better commitment at an older age so that there is likely more financial stability rather than being young and getting married.

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  4. I always was sad about the emotional impact of divorce on families, but I never considered how it affected the economy. I suppose I thought about how it changes the incomes for each parent and it costs money to divorce someone, but I guess I never really looked at the bigger economic picture. I know personally that divorce has cost my dad a ton of money and has hurt him financially, and that could affect the economy because we don't spend a lot of money, which impacts the companies and businesses selling those goods or services. I liked your post, I thought it was insightful and well-written. Nice job(:

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  5. I agree that divorce rate has affected the economy negatively because when you think about the single parents out there struggling and not spending money it all makes sense. The economy isn't going to be strong when these single mothers have three children to accommodate for. Businesses will start to shut down also if they don't get enough business. Also, divorces end up costing far more money in the end for each person, also including disputes between properties and items.

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  6. It is nice to hear that divorce rates are decreasing in this country, however when I saw the statistic of it, that 40% of marriages ended up in divorce, I was in shock. I would suffer so much to have to go through with a divorce, and hate seeing people do it. I agree though that a lot of people are waiting until a later age to get married to insure financial stability, however my parents get married very young and they are still together. I just wish that instead of just ending the relationship couple would work together to fix it. I would be nice to see divorce rates steady decline in the future years.

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  7. Divorce is obviously hurtful for the family; not only emotionally are there struggles but financially and even splitting up their children depending on circumstances. Divorce includes divorce planning, witness testimonies in court and even planning the division of retirement plans. My family has a close friend who is divorcing his wife (kids are in college or on their own now) and although there are many things to consider regarding their relationship, the money that he has saved up to retire is at risk. He signed a paper in the beginning of his marriage that agreed to link his profits and funds/savings with hers, and now, as they try to divorce she is receiving 72% of his money. Because my dad works with him, he can see the affect it has on his financial background and his future. Great post Leah... way to show a different aspect to a subject that it sometimes only handled and looked upon as a relationship issue.

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  8. Divorce actually impacting the economy negatively was something that never crossed my mind. It was interesting learning how going from a married household to being divorced affects the income of the parent but also the economy. Spending less on products due to lack of income not only affects the children but the business too -- if a business gets less costumers because of high divorce rates and low incomes, then that business will eventually go out of business. I'm glad for the extra insight on how something personal can impact the economy you have provided, nice job.

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  9. Wow. I never knew that divorce could both help and hurt the economy. I knew it's affects on a family were bad but, I never have even thought of how the economy may be impacted. With one or both of the newly singled parents struggling, most likely they stop spending money. Which in turn mean the economy isn't getting any money either. Without the money, businesses close up. Your article was really cool and made me think a lot about how seemingly little things affect our economy.

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  10. To tell you the truth i had no idea that divorce had such a power affect on the income of women, i mean i certainly knew that the household income was split because the family split and income was no longer shared unless it was for child support. And in bring up an important fact such as the demand of products went down because the mother didn't have the income to provide her family with these goods making them unimportant. Obviously the decrease in demand part is very common because now a days divorce rates are high leaving more mothers and children in poverty, being in fact that child support is about 18.5% is the total income of the mother, she definitely does not have the money to provide the needs and wants of her family, which has a detrimental affect on the economy.

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  11. I always knew that there was so much of a effect from divorces but never to the extent you showed. Divorces also shift a lot of statistical numbers because households go from making 80 thousand to much close to 40 thousand which is closer to the poverty level. This was a great writing assignment about the shift on demand curve due to divorces.

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  12. While the concept of divorce hurting the economy in the short run might be an issue, it might simply be a cultural shift in which more members of society feel empowered enough to live on their own. (Men and women alike) In this case, the shift away from dependency on one another would in turn, increase motivation to build themselves economically and socially more than before. (See: Japan) With a greater amount of skilled, unfettered workers, the economy could, in fact, result in a long term growth as the new skilled workers begin to enter the workforce.

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  13. These are some interesting statistics. I guess my family happens to be a bit of an anomaly, since after my parents divorce my mother's income actually increased, and as a family we were significantly more poor when my parents were still together. Although I do agree that since my mother remarried our income has significantly increased once again. It is a bit horrifying to see the divorce rate so shockingly high, and I shudder to see how many children across the nation live in a similar situation as my own. While there is some sinister comfort in knowing that I share similar scars with so many people, I hope that the divorce rate will continue to decrease so I can reacquire my faith in the seemingly pitiful system of marriage. I mean seriously, women have a better chance of surviving lung cancer than staying married until they die. (Hopefully not of lung cancer)

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  14. This was a very interesting article. This is something that goes on in our lives all around us, and it's never really a factor, whether or not it hurts our economy. For my family, this is exactly what happened. Once my parents got divorced, first of all it costs them all that money alone to go through with it, but they also both had a lot less money. This is really something that people should start to pay more attention to, because as it is becoming more of a regular thing, if people aren't sure about their marriage, they could end up being hurt in the long run, and all in all, it's really not worth it.

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  15. I really enjoyed the fact that you wrote about this. I'll admit, I wouldn't typically think of 'divorce' being something that effects the economy, but this proves that it most definitely does! I completely agree with you that divorce has a huge impact on the rate of unemployment for those looking for jobs. One thing to think about, is how they could fix this. I think it could possible be beneficial to raise the age at which you can get married because like you stated, marriages where the male and female are older tend to last longer than when younger people get married!

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  16. I guess just about everything affects the economy. Everyone I know parents are divorced, but I bet had no idea that it affected the economy. 39% of all divorced women with children become poor. Which is sad for the women. It almost seems like the women should stay with the husband until the kid can financially support themselves and then get a divorce. Instead the woman and the kid grow up in poverty.

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  17. Clearly all families are put in an adverse situation when a divorce takes place. Possibly the biggest difficulty that people face is a lack of income because the total household income is split in two, as you alluded too. However, lawyer bills tend to stack up very quickly as parents fight for custody of children or even over possessions. The less divorces that take place the more economic growth American will see because there will be stability in peoples incomes.

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  18. I really like this new perspective on divorces. Normally when people think of divorce, the only thing that pops into their mind is the sympathy they have for the families living through it. But looking at divorce from the economic standpoint provides a fresh outlook on the real effects of divorce. Before this, I never realized what a financial toll divorce could have; like that the family could potentially be in poverty, which is just awful. Great job!

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  19. This is a very interesting topic, I haven't thought about divorce's effect on the economy but it makes complete sense. In reply to Collin's comment, it is clear that a divorce does not only effect the two people breaking the marriage, it affects the children, legal assitance, and their home. There is a lot of sacrifice/consequence that comes with that decision--primarily in the area of finance.

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  20. Even as a child of divorce, I never really thought about the way my parent's income effected the economy. I've known for years my mother has struggled to provide for my two older brother's and I, but I never thought about how a shortage of money in our family can effect those little economic factors around us. Of course, branching a bit off, there are factors that post-divorced families go through in terms of spending: therapy sessions for the children, counseling for those grieving, and even the spending on moving trucks to separate. There's also the factor that when most couples decide that they would like to raise a family, they make plans based on their double income and don't always consider what will happen if they divorce and are stuck with only their single income. Overall, divorce is such a rough topic in terms of emotions, but even I am surprised by how much a separation effects the economy.

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  21. This is a really interesting topic to discus from an economic standpoint because most people only consider the emotional impact of divorce. Moreover, your essay draws attention to the increase in demand for jobs, due to both the father and mother needing employment. Also, I obviously understand that divorce overall has negative effects; however, I did not realize that it is extremely bad for the economy.

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  22. Just as everyone else, I had no idea divorce had such an impact on the economy. I know there is a lot of money spent on divorce with lawyers, therapy, child support, etc. It must be difficult for the single parents who were used to double income to then be left with just one income and all those bills for the divorce to be final. It is good to see that the divorce rate is going down, that will definitely help the economy. Great article!

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  23. This was a very interesting topic to read about. I think that it was good that you wrote about the topic of divorce because a lot of people these days can easily relate. I always knew that divorce was a negative thing due to emotion but I never really knew that it hurt the economy as well. What will happen if the divorce rate starts to increase again? How much of a negative impact will it make on the economy? I think that with all the things that play into our economy this is one of the easier things that can be fixed. People just need to be smarter about their decisions in their relationships. They need to be more honest and trustworthy to their partners and themselves. Nowadays people are just marrying out of carelessness. True love isn't really the reason anymore because a lot of marriages these days have ended in divorce. If people would just be true to their relationships then divorce would never be an issues in people’s lives and our economy.

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  24. Although I can't relate to this topic, I found it very interesting. Many people can relate to this topic since divorce is so common. It's sad that the divorce rate has gone up so much over the years because it makes people suffer a great amount financially. I just think people need to be smarter when they get married because they need to think more big picture. By doing this and thinking ahead, the divorce rate could possibly go down.

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  25. The rising divorce rates (and overwhelming amount of impoverished single mothers) is one of the reasons we need to work on creating true gender equality in this nation. Women still only make around 77 cents to every dollar a man makes, which is a major reason women make up the majority of impoverished people. And if a women has not only herself, but three kids to feed, that just makes the income gap more devastating. If we could work on closing the wage gap, the effects of divorce would be much less devastating.

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  26. This perspective on divorce is an eye opener. The financial impact of divorce is not the first thing that came to mind. It's sad that the divorce rate has gone up so much over the years Looking at it from an economical standpoint, the amount people pay for a good lawyer to earn custody over the children and possessions is a significant amount. Once American’s realize that the less divorce, the more economic growth there will be. Paying more attention to this detail will benefit everyone!

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  27. I knew that divorce was a bad thing but I didn't know it was that bad for the mother, potentially having to live in poverty. I figured that with the divorce the mother would probably get the children and the father would have to pay child support. That obviously doesn't do much justice though, considering the mom now has to get her own house and own normal goods. As I watch my own mom be a single mother, I can understand why it's so difficult. Instead of two people providing and working for a family, there is only one provider. Income would definitely be tight because there is only one person working. Divorce rate could easily decrease if people were to just slow down and think, if people did that it would be so much easier on the economy and on all of the families. Divorce really takes a financial toll on everyone in the situation.

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  28. I thought this was a very well thought out topic, because it is a sensitive subject, however it is a subject that people should hear about. I really liked this topic because I can completely relate to it as my parents are divorced, however I didnt know the levels of poverty that some women expierence after divorce, that was completely outstanding to me. Awesome topic to pick!

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  29. I still don't understand why so many people are divorcing these days. We already know divorce can be bad for your check book and your emotional health. If you are curious, you may click here to find out the average divorce cost. It turns out, it can be bad for your physical health, too. Have you heard that people who divorce have a greater likelihood of smoking and lower amounts of physical activity?

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