StanCollender'sCapitalGainsandGames Washington, Wall Street and Everything in Between



Divorce and Upward Mobility

19 May 2010
Posted by Andrew Samwick

The direction of this effect is no surprise.  It is interesting to see the magnitudes.  New research from the Economic Mobility Project:

Family structure has an impact on a child’s economic mobility prospects, according to the Pew Economic Policy Group’s report Family Structure and the Economic Mobility of Children. The group’s Economic Mobility Project found that only 26 percent of children of divorced parents who start in the bottom third of the income ladder move to the middle or top third as adults. This compares to 42 percent of children who are born to unmarried mothers and 50 percent of children with continuously married parents in the same income category.

The comparison to children born to unmarried mothers is unexpected -- it shows just how disruptive divorce is for later economic development.

Well, there are probably big

Well, there are probably big selection issues here, in particular having a single mother explains why some kids start off in the bottom quarter, while having married parents does not. So the kids with divorced (i.e. formerly married) parents probably have a lot worse human capital endowments than those with single mothers.

The still married vs. divorced parent comparision is more meaningful, though causality is still not 100% clear -- wouldn't characteristics that lead the divorce be correlated with characteristics that lead to bad economic outcomes for kids?


Divorce Rate Going Down?

Thankfully marriage is looking better these days. Tara Parker-Pope, a health journalist:

The 50 percent divorce rate is really a myth. The 20-year divorce rate for couples who got married in the 1980s is actually around 19 percent. Everyone thinks marriage is such a struggle and it’s shocking to hear that marriage is actually going strong today. It has to do with how you look at the statistic. If the variables were constant, then a simple equation might work to come up with the divorce rate. But a lot of things are changing. And it is true that there are groups of people who have a 50 percent divorce rate: college dropouts who marry under the age of 25, for example. Couples married in the 1970s have a 30-year divorce rate of about 47 percent. A person who got married in the 1970s had a completely different upbringing and experience in life from someone who got married in the 1990s. It's been very clear that divorce rates peaked in the 1970s and has been going down ever since.


Minimizing the human and financial costs of divorce

These are disturbing numbers and outcomes.

As tactical elements in the divorce arena, I and my firm do our best to minimize the very real costs to the parties involved.

Human nature being what it is, our clients arrive hurt, angry and looking for a "bulldog" lawyer to inflict injury on and extract vengeance from their "opponent." Our response is to carefully remind them that divorce is not war, and the enemy is not faceless.

We point out that the more emotional and unreasonable they are in their demands, the fewer resources - time, emotional, or financial - there will be for either party.

This study, and its implications for the future outcomes for children of divorce, clearly point out an important additional consideration we need to mention.





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