Transfers among divorced couples: evidence and interpretation.

Area of Science:

• Economics
• Sociology
• Family Studies

Background:

• Divorce settlements involve complex economic transfers between spouses.
• Understanding the financial implications for all family members is crucial.

Purpose of the Study:

• To analyze the economic impact of divorce settlements in the U.S.
• To estimate the effects of spousal incomes on divorce transfers.
• To simulate welfare effects on husbands, wives, and children under various scenarios.

Main Methods:

• Utilized data from the National Longitudinal Study of the High School Class of 1972 (white cohort).
• Estimated divorce transfers based on spouses' incomes and earnings growth during marriage.
• Simulated welfare outcomes under different assumptions about marriage contracts and post-divorce resource coordination.

Main Results:

• A positive correlation exists between divorce transfers and husband's earnings growth.
• A negative correlation exists between divorce transfers and wife's earnings growth.
• Estimated child expenditure post-divorce is approximately half of the pre-divorce level.

Conclusions:

• Divorce settlement amounts are influenced by individual earnings trajectories during marriage.
• Children experience a substantial decrease in financial resources following a divorce.
• Further research is needed to explore policy implications for child welfare post-divorce.