Economic Consequences of Divorce: A Review

Abstract

The consequences of a relationship break-up span a wide range of foreseeable and unforeseeable effects in the life courses of adult individuals, their parents, and their children. One consistent finding in the divorce literature concerns the gender gap in the financial consequences of divorce. While there are huge international differences, it appears that in every country, women are economically disadvantaged following a divorce. Men tend to lose little or no income after a divorce, while the financial losses for women can be substantial. In this chapter, we provide an overview of the financial consequences of union dissolution. We thereby consider both divorces and break-ups of unmarried cohabitating partners. First, we focus on the magnitude of the decrease in financial resources and the moderating effects of welfare state benefits. Second, we look at the coping strategies women employ to make up for their income losses. Third, we look at the position of lone mothers. Being a lone parent after a break-up turns out to be a very difficult situation, as the chances of ending up in poverty are high for single parents. Again, welfare states react quite differently to the challenges faced by lone parents, which results in a differential poverty risk for lone parents across countries.