Marital splits and income changes: evidence for Britain

Abstract

We provide new evidence about what happens to people's incomes when their or their parents' marital union dissolves, using longitudinal data from waves 1-4 of the British Household Panel Survey. Marital splits are associated with substantial declines in real income for separating wives and children on average, whereas separating husbands' real income on average changes much less. Results are shown to be robust to the choice of income definition and degree of economies of scale built into the household equivalence scale, and are validated with information about respondents' assessments of how their personal financial circumstances changed. In addition we analyse the extent to which the welfare state mitigates the size of the income loss for women and children relative to men, and document the changes in social assistance benefit receipt and paid work, and maintenance income receipt and payment.