Splitsville: St. Louis Fed Analyzes Economics of Unilateral Divorce

ST. LOUIS — Some economic studies suggest that divorce may have led to an increase of the number of mothers in the labor force and a decline in the level of girls educational attainment, and may also have reduced spousal violence.

Researcher Kristie M. Engemann and economist Michael T. Owyang surveyed several studies for the January issue of The Regional Economist, the quarterly journal of business and economic issues published by the Federal Reserve Bank of St. Louis. The publication is also available online at: http://www.stlouisfed.org/publications/re/default.cfm.

Statistics indicate that the number of divorces rose steadily from 1960 the early 1980s, but has declined since then. "This rise in the divorce rate coincided with the time when many states modified their laws, allowing divorce to be initiated unilaterally," said Engemann and Owyang.

One study found that unilateral divorce laws contributed 17 percent of the increase in the overall divorce rate from 1968 to 1988. Another study found that the adoption of unilateral divorce raised divorce rates in the short term but not in the long term.

Surveying economic literature, Engemann and Owyang noted one analysis which found that a married woman in a unilateral divorce state with a community-property law (meaning all marital property is divided in half upon divorce) was more likely to work outside the home than a woman in a state without unilateral divorce. On the other hand, a woman in a unilateral divorce state that had a common-property law (meaning she would retain only her own property) became less likely to work in the labor market. Yet another study found that married women with young children responded most to a change in divorce laws and became more likely to enter the labor force.

Engemann and Owyang also studied the common concern often discussed about divorce: the potentially negative effect on children. One analysis using data from the 1980 census suggested that educational attainment is negatively affected, more so for girls than boys. In addition, while women's wages were negatively affected by increased exposure to unilateral divorce laws, men's wages were not significantly different.

One economist who studied the potential relationship between divorce and spousal abuse found that the adoption of unilateral divorce did not cause a significant change in the number of husbands who killed their wives. He did find that the number of wives who killed their husbands, however, increased by 20 to 26 percent. In contrast to these studies, they found research which suggested that adults' wellbeing the rates of both domestic abuse and suicide improved after states adopted unilateral divorce laws.

"These studies demonstrate that unilateral divorce laws may have important economic and social consequences," concluded Engemann and Owyang. "Combined with laws that determine how property is distributed after divorce, laws that ease requirements for marriage dissolution can alter marriage dynamics by changing incentives and shifting the bargaining power between spouses."

With branches in Little Rock, Louisville and Memphis, the Federal Reserve Bank of St. Louis serves the Eighth Federal Reserve District, which includes all of Arkansas, eastern Missouri, southern Indiana, southern Illinois, western Kentucky, western Tennessee and northern Mississippi. The St. Louis Fed is one of 12 regional Reserve banks that, along with the Board of Governors in Washington, D.C., comprise the Federal Reserve System. As the nation's central bank, the Federal Reserve System formulates U.S. monetary policy, regulates state-chartered member banks and bank holding companies, and provides payment services to financial institutions and the U.S. government.

# # #