Abstract
The Norwegian post-divorce transfer scheme for families with children guarantees minimum maintenance payments from the non-custodial to the custodial parent. We studied the economic effects of divorce in such families. When the mother has custody, she falls behind before maintenance payments. After adding these, the outcomes at the median are very similar for both parents, contrasting studies from other countries, but the risk of a drop in equivalized income is large.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
Notes
Sources: OECD, Society at a glance 2001, Underlying data, Annex G: General context indicators, http://www.oecd.org, and Statistics Norway, http://www.ssb.no. In 1998, the Norwegian rate was at the OECD average, but in 1980–1995, it was higher. The number of divorces per 100 marriages for a given year is the percentage of divorces that would result during 60 years of marriage at the current divorce rates.
For male non-custodians, there was some discrepancy between reports from the mother and the father; the (non-custodial) fathers themselves reported 8 days per month. We use the lower number in the analysis.
An alternative would be to follow individuals until marital breakup and observe earnings at some fixed interval after divorce. One advantage of our approach is that it allows a comparison of divorcees and non-divorcees. A disadvantage is that we may obscure some post-divorce earnings dynamics.
We excluded 290 women and 282 men who subsequently re-married, as they are not entitled to the same transfers as those who do not and would have to be treated separately. Presumably, their outcomes would be most similar to those who stay married, as they do not necessarily suffer the same loss of spousal income.
We had to base the “full-time” definition on earnings due to lack of reliable hours information. The chosen limits approximately correspond to the average earnings of hospital orderlies (men) and unskilled nursery workers (women).
The purpose of this “transition benefit” is to support lone parents who are unable to uphold work due to childcare responsibilities, or who are undertaking education to improve their employability. The benefit may be combined with a small amount of labour earnings, which are then deducted. Child support from the non-custodial parent is also deducted. This benefit is subject to taxation.
The authorities guarantee a minimum amount of support per year (NOK 11,760 in 1994). If the non-custodian’s income is insufficient to provide the minimum amount by applying the standard rate, the difference is paid by the government. In these cases, the support payments are decided discretionally, typically below the standard rate, with zero payments for those with very low incomes. In our calculations, we approximate this practice by adjusting the standard rate (q) as follows. Let a denote the minimum amount and m=a/q. For non-custodial income (y) less than 0.5 m, we set payments to 0. For 0.5m≤y<m, we adjust the rate to q(y−0.5m)/0.5m. The received support is calculated as max(a, qy).
For countries without an official poverty threshold, half of the median income is often used as a “poverty line”. We have chosen the politically decided minimum pension partly because it gives an idea of what is officially accepted as a minimum, but also because the median income in our selected sample would not be representative for the population.
Another approach would be to estimate τ as a function of individual characteristics and then use imputed values in the analysis. However, that is not possible as the background information in the survey is not the same as in our sample.
The estimated earnings equations are reported in Appendix, Table 7. The selection terms turned out to be insignificant. However, replacing the predictions with ordinary least significance (OLS) predictions hardly affected the results. For spouses, the potential income is based on average predictions grouped by age in 5-year intervals, as we have information on spouses’ age, but not their education and experience.
We have also examined the effect of using predicted incomes (including the pseudorandom component) for all individuals, including those who actually work full time by our definition. The effect is modest, compressing the distribution of net incomes (D) slightly, mostly for men.
References
Aaberge R, Björklund A, Jäntti M, Pedersen PJ, Smith N, Wennemo T (2000) Unemployment shocks and income distribution: how did the Nordic countries fare during their crises. Scand J Econ 102(1):77–99
Atkinson AB, Rainwater L, Smeeding T (1995) Income distribution in OECD countries: evidence from the Luxembourg Income Study (LIS). OECD Social Policy Studies, no 18. OECD, Paris
Banks J, Johnson P (1994) Equivalence scale relativities revisited. Econ J 104:883–890
Becker G (1965) A theory of the allocation of time. Econ J 75:493–517
Bianchi SM, Subaiya L, Kahn JR (1999) The gender gap in the economic well-being of non-resident fathers and custodial mothers. Demography 36(2):195–203
Buhmann B, Rainwater L, Schmauss G, Smeeding TM (1988) Equivalence scales, well-being, inequality, and poverty: sensitivity estimates across ten countries using the Luxembourg Income Study (LIS) database. Rev Income Wealth 34(2):115–142
Burkhauser RV, Duncan GJ, Hauser R, Berntsen R (1990) Economic burdens of marital disruptions: a comparison of the United States and the Federal Republic of Germany. Rev Income Wealth 36(4):319–333
Burkhauser RV, Duncan GJ, Hauser R, Berntsen R (1991) Wife or Frau, women do worse: a comparison of women and men in the United States and Germany after marital dissolution. Demography 28(3):353–360
Coulter FAE, Cowell F, Jenkins SP (1992) Equivalence scale relativities and the extent of inequality and poverty. Econ J 102:1067–1082
Duncan GJ, Hoffman SD (1985) Economic consequences of marital instability. In: David M, Smeeding TM (eds) Horizontal inequity, uncertainty and well-being. University of Chicago Press, Chicago, pp 427–467
Finnie R (1993) Women, men, and the economic consequences of divorce: evidence from Canadian longitudinal data. Can J Sociol Anthropol 30:205–241
Haveman R, Bershadker A (1998) Self-reliance as a poverty criterion: trends in earnings-capacity poverty, 1975–1992. Am Econ Rev 88(2):342–347
Haveman R, Bershadker A (2001) The ‘Inability to be self-reliant’ as an indicator of poverty: trends for the U.S., 1975–1997. Rev Income Wealth 47(3):335–360
Heckman JJ (1979) Sample selection bias as a specification error. Econometrica 47(1):153–161
Hoffman SD, Duncan GJ (1995) The effects of incomes, wages, and AFDC benefits on marital disruption. J Hum Resour 30(1):19–41
Jarvis J, Jenkins SP (1999) Marital splits and income changes: evidence from the British Household Panel Survey. Popul Stud 53(2):237–254
Jenkins S, Cowell F (1994) Parametric equivalence scales and scale relativities. Econ J 104:891–900
Johnson WR, Skinner J (1986) Labor supply and marital separation. Am Econ Rev 76(3):455–469
Konrad K, Lommerud KE (1995) Family policy with non-cooperative families. Scand J Econ 97(4):581–601
The Ministry of Children and Family Affairs (1996) Høringsnotat. Forslag til endringer i bidragsordningen etter barneloven (Note circulated for comment, on changes in child support regulations). Oslo
Moffitt R (1990) The effect of the US welfare system on marital status. J Public Econ 41(1):101–124
Nixon LA (1997) The effect of child support enforcement on marital dissolution. J Hum Resour 32(1):159–181
NOU 1996:13 (1996) Offentlige overføringer til barnefamilier (Public transfers to families with children). Norwegian governmental report, Oslo
Smock PJ (1993) The economic costs of marital disruption for young women over the past two decades. Demography 30(3):353–371
Statistics Norway (1996) Undersøkelser om samværsrett (Surveys on child custody). Documentation report, Oslo
Tjøtta S, Vaage K (2002) Public transfers and marital dissolution. Working paper 0802, Department of Economics, University of Bergen
Triest RK (1998) Has poverty gotten worse? J Econ Perspect 12(1):97–114
Acknowledgements
The authors would like to thank the Norwegian Research Council for financial support, Grant No. 140127/530 (“Velferdsprogrammet”). The paper was completed while Bratberg was visiting the University of York, whose hospitality is gratefully acknowledged. We would also like to thank two anonymous referees for their helpful comments. A previous version of the paper was presented at the European Society for Population Economics (ESPE) 2000 conference in Bonn. The data used in this study were provided by the Norwegian Social Science Data Services (NSD). NSD is not responsible for the authors’ analyses.
Author information
Authors and Affiliations
Corresponding author
Appendix
Appendix
Rights and permissions
About this article
Cite this article
Bratberg, E., Tjøtta, S. Income effects of divorce in families with dependent children. J Popul Econ 21, 439–461 (2008). https://doi.org/10.1007/s00148-005-0029-8
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s00148-005-0029-8