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The Effect of Marital Breakup on the Income Distribution of Women with Children

Having a female first-born child significantly increases the probability that a woman’s first marriage breaks up. Using this exogenous variation, recent work finds that divorce has little effect on women’s mean household income. We further investigate the effect of divorce using Quantile Treatment Effect methodology and find that it increases women’s odds of having very high or very low income. In other words, while some women successfully compensate for lost spousal earnings through child support, welfare, combining households, and increasing labor supply, others are markedly unsuccessful. We conclude that by raising both poverty and inequality, divorce has important welfare consequences.