Why More Divorces Are a Good Sign for the Economy

By Jordan Weissmann

Economics tells us that when the labor market gets healthy, people become more likely to quit their jobs. They're also more likely to quit their marriages. 

In 2012, the number of Americans filing for divorce rose for the third straight year after dwindling during the recession. As Bloomberg explains today, that jump is a slightly sour sign that our finances and lives are collectively returning to normal. When the economy tanks, people tend to avoid major, potentially expensive life changes, such as getting married or having children. The same goes for getting divorced. Lawyers cost money. Many couples want to sell off their house when they split, which is tough when the real estate market is a wreck. And when unemployment is high, it's more difficult for stay-at-home wives to find jobs to support themselves in their new single lives. 

So, rather than bid each other goodbye, spouses stick it out in their unsatisfying relationships. According to a 2013 paper by the University of Arizona's Jessamyn Schaller, quoted by Bloomberg, a one percentage point increase in the unemployment rate correlates with a 1.7 percent fall in the divorce rate. Another study, by researchers at the Universities of Maryland and North Carolina, suggests that recessions are especially likely to stop women without a college education from ending their marriages, potentially because they'd have the most trouble landing work or finding money for a lawyer. 

So the recent uptick in unhappy endings is, perversely, good news for the rest of us.

“As the economy normalizes, so too do family dynamics,” Mark Zandi, chief economist at Moody’s Analytics, told Bloomberg today. “Birth rates and divorce rates are rising. We may even see them rise strongly in the next couple of years, as households who put off these life-changing events decide to act.”

They don't call the economics the dismal science for nothing

This article available online at:

http://www.theatlantic.com/business/archive/2014/02/why-more-divorces-are-a-good-sign-for-the-economy/283890/