Association for Public Policy Analysis & Management

Unemployment rates reached a record high during the Great Recession (years 2008-2012). However, the association between unemployment and family relationships has yet to be confirmed. Stress and tension accompanied by unemployment place the couple’s relationship at risk of dissolution. On the other hand, couples are less likely to end their co-residential relationship during hard times in order to cope with financial constraints. Theory suggests heterogeneity in the response to economic shocks. For example, cohabiting couples may be more responsive to unemployment than married couples due to lower separation costs. The effect of economic downturns on family relationships operates not only through personal unemployment but also increases in the perception of risks, which then prevents relationships from dissolution. This study aims to answer, first, whether parents are more or less likely to divorce or separate when one or both parents are unemployed? Second, are the associations between unemployment and dissolution stronger or weaker during the Great Recession?

I use data from the Survey of Income and Program Participation Panels 2001, 2004, and 2008 to investigate these questions. Respondents are interviewed and followed by the survey every four months and asked about their economic and demographic situations in each month of the reference period. I focus on parents who are living with their children and spouses or partners and examine whether they divorce or separate four months later. The analyses are conducted in two steps. First, a pooled model for relationship dissolution is estimated separately for married and cohabiting parents with state, year, and wave fixed effects (the last of which adjusts for attrition). Key independent variables are operationalized as both parents, only father, only mother, and neither parents having the characteristic, because prior literature suggests that associations between parental characteristics and separation are gendered. Second, parents’ unemployment status is interacted with the Great Recession to examine whether during the Great Recession unemployed parents were more or less likely to separate compared with unemployed parents in non-recession periods.

The results show that unemployed married fathers and employed married mothers have a higher risk of divorce or separation compared to neither unemployed (the base group). In contrast, the risk of separation increases only when both cohabiting parents are unemployed. With all other characteristics held constant, the probabilities of divorce and separation have remained constant over the 2000s. Unemployed parents, both married and cohabiting, have not responded differently to the Great Recession in their decisions of separation. Although for cohabiting parents the hypothesis that parents with lower socioeconomic backgrounds are more likely to split is generally true, parents’ observed characteristics are less strongly linked with relationship dissolution. These findings underscore the importance of employment in stabilizing family relationships for both married and cohabiting parents. The Great Recession adversely affected families through personal unemployment, rather than through perceived risks of potential unemployment. Future analyses will use prior history of unemployment to explore a different facet of such relationships.