Accumulation of Disadvantage Through Divorce

Examining the Heterogeneity in the Economic Consequences of Divorce among Women

Abstract

Divorce exacerbates individuals' economic situations, especially for women. Thus, it is considered a key mechanism of the inequality-generating process over the life course. However, previous studies have focused only on the average effects of divorce on women's economic situations, and little is known about the heterogeneity in the effects of divorce. The economic consequences of divorce may be larger at the lower end of the income distribution in the Japanese institutional context, characterized by the high economic dependence of married women on their husbands, the limited role of the social security system, and the disparity of the safety net through employment and family. Thus, this paper aims to examine the heterogeneity in the economic consequences of divorce among women across the income distribution.

I use data from the Japanese Panel Survey of Consumers（1994-2020）and apply quantile treatment effect models with person-fixed effects. Results show that the effects of divorce on women's equivalent household income are larger at the bottom end of the income distribution. Their economic dependence on their husband is higher at this end when they are married, and thus the relative impact of the loss of their husband's income is larger. Overall, the buffering effects of income redistribution are limited, and the effective coping strategies available to divorced women are limited to remarriage and standard employment. These results suggest that divorce not only generates disadvantages for divorced women as compared to married women, but also drives the cumulative disadvantage process making the poor even poorer, because of the persistent gender division of labor and the social security system in Japan.