Does Debt Affect Divorce? Evidence from China

Recently, the continuous rise in household debt levels has put increasing pressure on China's households, and the divorce rate has been increasing simultaneously. Therefore, how does household debt influence an individual's decision to divorce? Using empirical data from the China Family Panel Studies from 2010 to 2018, this study examines the influence of household debt on the decision to divorce from a micro perspective. Our findings reveal the following: (1) the level of household debt significantly impacts the divorce rate, and the estimation results still hold after a series of robustness tests; (2) heterogeneity analysis reveals that non-housing debt, as a component of household debt, is more sensitive to individual divorce behavior, whereas housing debt has no significant effect. Moreover, the analysis of different sample groups shows that household debt positively impacts the divorce rate of middle-income groups, individuals with high levels of substance craving, and those living in eastern China; (3) additional research indicates that household debt affects an individual's mental status, changes their marital status, and increases the probability of household divorce. This study's findings have provided new evidence for understanding theories about household debt and marital behavior and references for the government to develop relevant policies.