Earnings Trajectories Following Parental Separation Among First-Time Parents in Sweden

Abstract

This study examines how separation affects the earnings of fathers and mothers in Sweden. Based on large-scale register data, this study tracks the earnings of women and men who had a first child between 2002 and 2004, and who were living with a partner at the first birth. The study compares mothers and fathers who separated before the first child reached age eight with mothers and fathers who stayed partnered. In particular, the question of how parents’ earning trajectories differed by pre-birth earnings quartiles is explored. It is assumed that separated mothers had more positive earnings trajectories than mothers who stayed partnered, given that separation leads to an increase in the labour supply and a reduction in the depreciation of human capital endowment among women. The results of this study show that the earnings of separated mothers are indeed higher in the period of time immediately after the separation. However, 8 years after the first birth, the earnings of partnered mothers are higher than those of separated mothers. Differences between separated and non-separated fathers are considerably smaller than among women. The findings also indicate that pre-birth labour earnings are a strong predictor of the earnings trajectories of both separated and non-separated mothers.