The flip side of marital specialization: the gendered effect of divorce on living standards and labor supply

Drawing upon an exhaustive administrative dataset on French households, this paper presents new findings on the effects of divorce on living standards and labor supply for both women and men, accounting for public and private transfers and household size. We document the crucial role of within-couple earnings inequality on post-divorce living standards for each partner. Since standard before-after estimates may be biased by confounders (economic conditions, anticipation of divorce, selection issues, etc.), we implement a difference-in-differences framework associated with a nearest neighbor matching approach to assess the causal effects of divorce on both spouses. By doing so, we compare divorced individuals before and just after divorce with individuals who remained married over the same period and who are similar in many characteristics, including individual earning dynamics several years before divorce. Results show that women's decrease in living standards is larger, on average, than that of men. Child support payments, public transfers, massive female labor market returns, and rapid repartnering mitigate, but do not eliminate, post-divorce gender inequalities. The number of children plays only a minor role in single mothers' impoverishment; within-couple earnings inequality before divorce, resulting mainly from marital specialization, is the main driver. We document massive labor market reentry after divorce by previously inactive women, which can be viewed as another consequence of this marital specialization.