Economic recession lowers divorce rate

People can’t afford to get divorced in bad times. So we’ll see more as things get better. Divorce rate and economics: why we stick together in bad times.

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Last month, Statistics Canada released a new report showing the number of new divorce cases has fallen 2% every year since 2006. Sounds like great news. Are more stable marriages a new national trend?

Unfortunately, it’s not that simple. StatsCan pointed to the steady decline in marriages in favour of common-law unions and single-parent households, but that’s probably not a factor. The real reason has to do with how economics affect our behaviour. Divorce rates are procyclical, meaning they tend to fall in a poor economy. Given the lacklustre climate of the past five years, not only is the divorce trend unsurprising, but it will likely reverse as the economy improves.

There are three reasons divorce rates decline in a recession. The first is that, for dual income households, marriage is a form of unemployment insurance: if one partner loses a job, the other can offer financial support. That insurance only pays, however, if the partner who is still employed doesn’t choose to leave the marriage. The reality of recessions is that far more people worry about job loss than actually become unemployed. And no one wants to cancel their unemployment insurance when they fear being out of work. As a result, when unemployment increases, divorce rates fall.

It’s worth noting that, when calculating the 8% decline in divorce since 2006—07, StatsCan excluded data from the provinces with the lowest unemployment rates—Alberta, Manitoba and Saskatchewan. In fact, the number of new divorces before Alberta courts doubled in recent years, suggesting the low divorce rate trend isn’t nationwide.

The second reason why divorce rates may have fallen has to do with the housing market. Couples prefer to stay in less-than-satisfying marriages over losing the equity they have built up in their homes. A recent academic paper found that a 10% decrease in house prices is associated with a 29% drop in divorce rates among college educated couples. Nova Scotia seems to bear out this research: the province saw the largest decline in divorce during the recessionary years, when real estate cooled, and it is currently experiencing the biggest increases in sales volumes. This suggests that the low-divorce trend in that province is about to reverse, as more couples jump to cash out of their family homes—and marriages.

The most obvious reason for falling divorce rates during downturns is that filing for divorce is expensive. That doesn’t mean couples don’t split during recessions, but rather that in hard times they postpone the legal formalities until a time when they anticipate higher income.

All of this suggests an economic recovery will produce a spike in divorces. Still, marriage rates may get a little help from a surprising source: homosexual couples. In the U.K., divorce among gay couples is less than half that of straight couples. I’m curious to see what StatsCan will have to say about that.

Marina Adshade is an economics professor at Dalhousie University and author of the blog, Dollars and Sex

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