Working Paper No. 07-06
Labor Market Decisions, Children's Health, and Divorce
There are numerous contributing factors that should be taken into account in any marriage or divorce decision. This paper examines the interaction effects of a child's health with other important factors on the likelihood of divorce, such as labor market decisions and the type of divorce legislation in place. Most often, children are treated as a quasi-public good that enhances marriage quality. However, if the child is sick, the appeal of the marriage decreases. Likewise, living in a state with a unilateral divorce legislation decreases the costs of divorce, which implies a higher likelihood of divorce. When both parents work full time in the market, there may be less time available to devote to addressing any problems or to enhance the quality of the marriage. The interaction of the effects of decreased divorce costs through unilateral divorce legislation, both parents working full time in the market, and an unhealthy child is shown here to play a role in the stability of marriages and the decision to divorce. The main finding of this paper shows that interaction effects do in fact exist and account for 24 percent of the total effect of having both parents working full time in the market and 49.8 percent of the total effect of having an unhealthy child. This interaction is significant at a 95 percent confidence level. The direct effect of these shocks is also shown to be significant.