University of Wisconsin–Madison
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The cost of breaking up

Household income instability in the United States has doubled since the 1970s. As a result, children are now more likely to experience significant fluctuations in their family’s resources than they were four decades ago. Theory suggests that instability in household income may reduce parents’ ability to maintain their current standard of living and plan for the future. Most research on rising income volatility has looked at how labor market transformations have increased the volatility of individual earnings. In this article we argue that changes in family structure through divorce or cohabitation dissolution are another important source of income instability, and that the ending of cohabitating relationships has increased income instability for less-advantaged children. Whether growing family instability in fact contributes to rising income instability depends in part on the economic effects of relationships ending. Prior research has found large income drops following divorce or the end of a cohabiting relationship, particularly for women, but these studies have looked at a single time period or cohort. The earlier work does not examine whether changes in mothers’ labor force participation, government cash transfer programs, and cash assistance from social networks may have altered these economic effects over time. In addition, prior research has not examined whether and how family instability has contributed to growing income instability for children. Large-scale changes in family structure, maternal labor force attachment, and government cash transfer programs may have altered both the frequency of union dissolution and mothers’ ability to cushion associated economic losses. In this article, we combine the literatures on income volatility and family instability to examine trends in the economic effects of relationships ending. We ask whether the magnitude of income loss from family dissolution has changed over time, and whether it differs between families with married versus cohabiting parents. We also look at changes in how families use the labor market, and public and private safety nets, to smooth the economic costs of family instability.

Categories

Child Support, Complicated Families & Multiple-Partner Fertility, Economic Support, Employment, Family & Partnering, Family Structure, Financial Security, Labor Market, Means-Tested Programs, Social Insurance Programs

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