Divorce hits men harder financially than women, say economists

Divorce hits men harder financially than women, say economists

Husbands lose twice as much income as their wives when they divorce, according to research published by America’s central bank.

Analysis by the Federal Reserve Bank of St Louis showed divorce was costly for both men and women, with US couples who split up over the past year seeing an average reduction in income of 12pc compared with those who stayed together.

However, researchers discovered a marked difference between the sexes, with men seeing their incomes fall 17pc on average, while women experienced an average decline of 9pc.

Guillaume Vandenbroucke, a Fed economist, said there was a clear “earnings penalty for divorce, particularly among men”, adding that the differences were not due to spousal or child maintenance payments because they only measured wages and salaries.

He added: “This difference between men and women is most visible in their 30s, during which men lose close to 40pc of their income following a divorce, while women lose noticeably less.”

The research also showed that for women, the worst age to separate financially came in the years ahead of retirement, with women divorcing on their 65th birthday seeing an average income decline of almost 60pc.

Mr Vandenbroucke said it was unclear why divorce would affect an individual’s earnings as well as their wealth.

He added: “It is customary to consider the effect of divorce on expenses. Divorces impose new living arrangements on the affected parties and, hence, changes in housing expenditures. Divorces also matter for one’s tax status, health care spending, child care expenses. Divorces also have wealth effects since retirement accounts and other assets are often split between the parties.

“Yet, the data do not pertain to expenditures or wealth; they pertain to income. Why do recently divorced workers earn less than the others? One possibility is these individuals change their work patterns: Either they work fewer hours or they work different, lower-paying jobs.”

Mr Vandenbroucke said it was not possible to draw conclusions about why the decline in male earnings was so marked after a divorce.

However, Debora Price, a gerontologist and professor at Manchester University, said incomes and social status probably played a big role, particularly among young couples.

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She said: “People who get divorced are usually from lower income groups which is a well-known phenomenon across OECD and European countries. The research probably also tells us that men who get divorced in their 20s, especially, have low incomes – we know for example that unemployment and financial stresses can be a cause of marriage breakdown, and this might be what we are witnessing here – that it is the men who had less stable incomes, low incomes, or experienced unemployment whose marriages were more likely to break down.

“Depression is associated with divorce. So you might be slightly more likely to lose your job after a divorce.”

However, Ms Price stressed that the Fed’s research did not “tell us anything about whether their incomes have changed at all, or whether divorce is a cause of their income changes or not”.

Ms Price also described the Fed’s research as limited, adding that more extensive UK research “has shown that on average divorce impacts women’s income as well as wealth negatively, more severely than men and for a longer time, even the rest of their lives”.

She added: “This is largely because women may become single mothers after divorce which impacts their earning ability and their ability to progress in their work or career trajectories, and often they receive no or insufficient child support whereas children are expensive to bring up. Many studies have shown that women’s economic hardship and deleterious financial consequences of divorce are associated with the presence of children, but this affects men much less.”

The Fed’s research also highlighted that while marriage rates have fallen considerably in recent years as people choose to stay single, “there remains a sizable fraction of the population that is divorced. In 2022, nearly 14pc of the population between ages 25 and 65 was either divorced or separated. In 2001 the figure was nearly 16pc”.