Abstract
SUMMARY This study uses questions on household repayment problems from the Panel Study of Income Dynamics to examine how the transition from marriage to divorce affects default rates by gender. The results show that divorced women are more likely to have repayment problems than divorced men and married-couple households. Further analysis reveals that divorced women who are receiving welfare are significantly less likely to default. Because average welfare benefits decreased in the early 1990s, the results suggest that this decrease provides a partial explanation for why the default rate increased between 1991 and 1995 for divorced women. The effect of welfare on the default rates of divorced men and married couples is insignificant. And there is no evidence that receiving child support and alimony payments significantly affects the probability of default.
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