Abstract
This paper analyses the relationship between a husband’s job loss and marital stability, focusing on involuntary employment terminations due to plant closures or dismissals. Using discrete survival analysis techniques on data from the German Socio-Economic Panel, we find plant closures and dismissals to be associated with a 54 and 74% higher risk of marital dissolution respectively, though the strength of association varies significantly by how long ago the change in employment status occurred. We extend the previous literature by considering heterogeneity in the relationship depending on whether new employment was found. Our analysis shows that the dissolution risk remains elevated even in couples where the husband has taken up a new position. Surprisingly, the relative risk of dissolution following the first period in a new job after a job loss is about the same as the relative risk of dissolution following the first period without employment. The relationship between finding a new job and marital dissolution appears to be mediated by changes in working hours as well as wages. In two extensions, we also consider the role of the wife’s employment status in moderating the relationship and show that a wife’s job loss is not associated with a similar increase in the probability of divorce as a husband’s.
Highlights
This paper analyses the relationship between the job loss of the husband and marital stability, focusing on the potential for heterogeneous results depending on whether aC
We argue that the overall information update associated with the job loss could remain negative, which, coupled with the stress associated with starting a new job and potentially adverse characteristics of the new job, results in a largely unchanged dissolution risk, even though finding a new job is presumably a positive signal in itself
The lag structure of the model implies that the reported relative risk in the first entry in column (1) can be interpreted as follows: if a husband has just or at some point in the past experienced a job loss due to plant closure, the risk of experiencing a dissolution in the year is 74% larger than the dissolution risk of couples, in which the husband remained employed up to this point
Summary
This paper analyses the relationship between the job loss of the husband and marital stability, focusing on the potential for heterogeneous results depending on whether a. Our results show that a husband’s involuntary job loss is associated with a roughly 54% increase in the dissolution probability in the case of plant closings and 74% in the case of dismissals We interpret this to be a result of information updating regarding the quality of the match, including lifetime earnings and negative characteristics brought to light by the adverse conditions, as well as short term stress. Plant closings, which are frequently used to identify exogenous job losses, show a Unlucky at work, unlucky in love: job loss and marital stability smaller relationship with marital dissolution than dismissals This could be for a variety of reasons, including dismissals inducing a larger negative information update, causing more psychological stress and potentially capturing unobserved heterogeneity.
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