Marital Disruption and Economic Wellbeing: A Comparative Analysis

1. Marital Disruption and Economic Wellbeing: A Comparative Analysis Arnstein Aassve (ISER, University of Essex and CASE) aaassve@essex.ac.uk Gianni Betti (Department of Quantitative Methods, University of Siena) betti2@unisi.it Stefano Mazzuco (Department of Statistics, University of Padua) mazzuco@stat.unipd.it Letizia Mencarini (Department of Statistics, University of Florence) mencarini@ds.unifi.it

2. What do we know? • Large differences across European countries in terms of • Divorce rates • Poverty associated with marital dissolution • Marital dissolution is the most important cause for single motherhood • Poverty is particularly high among single mothers • There is a strong gender bias in terms of economic wellbeing • Divorced women have a considerably higher likelihood of experiencing poverty than men • Divorced men do not have a higher poverty rate than non-divorced men. • These differences seem to be clustered – at least to some extent – by welfare regimes • 4 typologies:Liberal, Social Democratic, Conservative, Mediterranean

3. Trends: Crude divorce rates around 2001 [Council of Europe (2002) ]

4. Trends: Divorces per 100 marriages in the selected countries, from 1994 to 2001 (Eurostat data)

5. Total Divorce Ratein the selected countries, from 1994 to 2001 (Eurostat data)The mean number of divorces per marriage in a given year

6. Mean duration of marriage at divorce in the selected countries, from 1994 to 2001 (Eurostat data)

7. What do we know? • Large differences across European countries in terms of • Divorce rates • Poverty associated with marital dissolution • Marital dissolution is the most important cause for single motherhood • Poverty is particularly high among single mothers • There is a strong gender bias in terms of economic wellbeing • Divorced women have a considerably higher likelihood of experiencing poverty than men • Divorced men do not have a higher poverty rate than non-divorced men. • These differences seem to be clustered – at least to some extent – by welfare regimes • 4 typologies:Liberal, Social Democratic, Conservative, Mediterranean

8. Research on divorce patterns in Europe • Increasing amount of research on marital dissolution and wellbeing of men and women in Europe. Recent studies: • Andres at al (2004) – comparative study of Belgium, Germany, Italy, UK, and Sweden: • Women with dependent children in the UK suffer most • Sweden: hardly any gender difference due to high benefits and generous provision of childcare • Uunk (2004) • Generally women suffer from divorce, but at varying degree • A country’s welfare state arrangements are important for the economic consequences of divorce • Median income declines weakest in Scandinavian countries and largest in France, Austria, Luxembourg and UK

9. Research issues concerning the link between marital dissolution and economic wellbeing • Economic welfare very often measured in terms of income or poverty • BUT income and poverty are highly sensitive to the use of equivalence scales • The issue of equivalence scales • becomes more precarious when considering divorce – as this is normally associated with a significant change in household composition • They are also limited in measuring overall wellbeing • Selection issues: • the prospect of a dramatic decline in wellbeing might itself affect the marital dissolution event.

10. Focus of this paper • Measurement: • Here we construct a range of wellbeing indices and compare these with poverty status • Wellbeing indices are less sensitive to large shifts in the household composition (and hence the equivalence scale) • Q: Do they produce similar results? • Q: Do differences between welfare regimes persist with alternative measures of wellbeing? • Selection: • Since the prospect of a dramatic decline in wellbeing might itself affect the marital dissolution event, dissolution is potentially endogenous with respect to wellbeing • We would like to identify the net effect of marital dissolution on wellbeing • We do so by applying propensity score matching (PSM) techniques

11. Measuring wellbeing: poverty • Poverty status • i.e. a dichotomous version of household income [Poverty threshold defined as 40-50-60-70 percent of median net equalised household income] • Equivalence scales used • OECD (modified) • They do have an impact on computed poverty rates but no impact on the ranking of countries • Relative income • Poverty is treated as a matter of degree (1 for poorest and 0 for the richest) • The level is determined by the rank in the income distribution and the individual’s share in the total income received by the population

12. Measuring wellbeing: Deprivation index • Defining wellbeing in terms of a dichotomous poverty status variable is • an over-simplification • only monetary • A Deprivation index, in contrast • is multidimensional, and • may include subjective measures, conditions of the dwelling, possession of consumables, affordability etc. • We built a total d.p. and then one for each of 5 “dimensions”

13. Measuring wellbeing: Deprivation index 24 items grouped: • Basic non-monetary deprivation (affordability) • Secondary non-monetary deprivation (lack of common durables) • Lacking of basic housing facilities • Housing deterioration • Environmental and neighborhood problems

14. Deprivation index and weights • The imposed weight used in calculating the deprivation index is important • Two factors influence the weight • The item’s power to describe deprivation • depends on the frequency distribution of the item. That is, lack of an item should be assigned a large weight if most people possess this item • Correlation between deprivation items • Smaller weight should be assigned if the correlation is very high • Also, not possessing an item (durables) counts toward deprivation only if the household could not afford it

15. Estimating the impact of marital disruption on wellbeing • Approach: • compare wellbeing of divorced and non-divorced women • Ideally …. • we would like to compare a divorced individual with him or herself in the case where she/he is NOT divorced • This would give us the effect of the marital dissolution • Problem (of course!): • the two cases are mutually exclusive: A woman cannot be divorced and not divorced at the same time. • In other words – the counterfactual is non-existent

16. Propensity Score Matching (PSM) • so instead of the counterfactual, we construct an approximation to the counterfactual • Dividing individuals into a control group and a treatment group. • Treatment refers to a divorce event • Control group: those who did not experience a divorce event • Then “match” or “pair” treated (divorced) with individuals from the control group (not divorced) - which are similar in their characteristics

17. Propensity Score Matching (PSM) - STEPS • Matching on background variables is based on the propensity score. • Approach is to estimate a probit model of divorce events on background variables this gives the propensity of experiencing a treatment • Treated (had a divorce) and untreated (did not have any) are then matched based on this estimated propensity • The (average) effect of divorce on wellbeing is computed by comparing differences between matched individuals But note that we are estimating the effect of a CHANGE in divorce status on a CHANGE in well-being status

18. Results (PSM): The effect of marital dissolution on entering poverty

19. Results (PSM): Average Treatment Effectof marital dissolution on relative income • No significant effects for men • Significant effects for women, with important differences according to presence of children or not

20. Results (PSM): Average Treatment Effect of marital dissolution on change in total deprivation • Different picture: • Significant effects for men as well • (see Soc.Dem. Men with children) • For women: Liberal still highest, but the effects are closer

21. Results (PSM): Average Treatment Effect of marital dissolution on change in basic lifestyle deprivation (affordability) • Effects are consistent with the results for total d.i. • This time effects for women are higher than total d.i., weaker in case of children • For men, now, higher and more signficant in case of children

22. Results (PSM): Average Treatment Effect of marital dissolution on change on secondary lifestyle deprivation • The gender gap is reduced • For women Social Dem. have quite strong effects

23. Concluding remarks and caveats • Gender gap confirmed • When monetary measures are used women suffer disproportionately larger effects than men • Findings consistent with welfare regime theory • Effects differ depending on poverty threshold chosen • The effects are somewhat different when wellbeing is measured in terms of deprivation • Gender gap not so clear any longer for social democratic and liberal welfare regimes • Gender difference is smaller when children are not present • Separate estimates for couples with children and no children • Divorced women with children suffer considerbly more compared to women without children – as long as economic wellbeing is measured in terms of poverty • Much less difference when economic wellbeing is measured in terms of deprivation or relative income

24. Extensions (not included in paper) • At the moment we analyse economic wellbeing before and after a marital disruption • Of interest is to analyse economic wellbeing two, three and four periods/year after divorce. • Will answer to what extent a marital disruption may lead to long term disadvantage • Estimates country by country, clustering the results • to see whether the welfare regimes grouping is confirmed