Time cannot heal all wounds: Wealth trajectories of divorcees and the married

Abstract

Objective: To explore disparities in wealth trajectories between divorcees and continuously married individuals including moderation effects of remarriage and gender. Background: Amid concerns of long-term economic consequences of divorce, research illustrated that ever-divorced individuals hold less wealth than the married preretirement. However, it remains unclear whether this is a direct result of immediate, lasting divorce-related wealth penalties or whether divorce also leads to long-term wealth accumulation disparities. Method: Using personal-level, longitudinal wealth data from the Socio-Economic Panel Study, I applied propensity score and exact matching with random-effects growth models to compare wealth trajectories of divorcees and the married. The matching allowed (1) married controls to be assigned a theoretical divorce date for ease of comparability to the treatment group (i.e., divorcees) and (2) the account of a wide range of baseline differences. Results: Wealth differences between ever-divorce and continuously married individuals stem from lasting disadvantage—particularly for housing wealth—generated immediately around divorce rather than a scarring of divorcees' wealth accumulation. Remarriage but particularly gender is relevant moderators. Whereas remarriage moderates net wealth trajectories through housing wealth, gender moderates trajectories through financial wealth. Conclusion: Divorce importantly contributes to wealth stratification. Mitigation of divorce-related wealth penalties for both men and women needs to focus on immediate, but lasting costs of divorce particularly regarding homeownership.