When It Rains It Pours: Under What Circumstances Does Job Loss Lead to Divorce

Much of the previous research that has examined the effect of job loss on the probability of divorce rely on data from the 1970s-80s, a period of dramatic change in marital formation and dissolution. It is unclear how well this research pertains to more recent trends in marriage, divorce, and female labor force participation. This study uses data from the Survey of Income and Program Participation (SIPP) from 2000 to 2012 (thus including effects of the Great Recession) to examine how displacement (i.e., exogenous job loss) affects the probability of divorce. The author finds clear evidence that the effects of displacement appear to be asymmetric depending upon the gender of the job loser. Specifically, displacement significantly increases the probability of divorce but only if the husband is the spouse that is displaced and his earnings represented approximately half of the household’s earnings prior to displacement. Similarly, results show that the probability of divorce increases if the wife is employed and as her earnings increase. While the mechanism behind these asymmetric results remains unclear, these results are consistent with recent research that finds a destabilizing effect on marriages when a wife earns more than her husband.