This Journal of Human Resources paper by Elizabeth Ananat and Guy Michaels is a few years old now, but as I’m readying my first dissertation chapter for submission, I’ve been reading up and reminding myself of various literatures and it seemed appropriate. Ananat and Michaels present an intuitive, causal story for how divorce causes women to live in poverty. It seems pretty straightforward: the break-up of a marriage means women are less likely to live in a household without income from someone else, but also that women work to compensate for such income losses by going back to work, moving in with siblings, etc.
Divorce increases the probability of living in a household without other earners. In fact, we estimate that breakup of the first marriage significantly increases the likelihood that a woman lives in a household with less than $5,000 of annual income from others—the likelihood rises from just over 5 percent for those whose first marriage is intact to nearly 50 percent for those whose first marriage breaks up. However, women can and do respond to income loss from divorce by combining with other households, through paths including remarriage or moving in with a roommate, sibling, or parents. Moreover, women further compensate through private (for example, alimony and child support) and public (for example, welfare) transfers, and by increasing their own labor supply.
I use the same logic to say that as long as she has some idea that the divorce (or union dissolution in my case as I include unmarried couples) is imminent, a woman should make compensatory decisions regarding the future loss of income, not just the immediate loss of income.
E.O. Ananat with Guy Michaels. “The Effect of Marital Breakup on the Income and Poverty of Women with Children.” Journal of Human Resources 43.3 (2008): 611-629.