The effect of unemployment on couples separating. Panel evidence for Germany, Switzerland and the United Kingdom

We examine how unemployment affects the separation risk of heterosexual co-residing couples using an innovative method and large panel surveys. Theoretically, unemployment spells may decrease the separation risk as a drop in resources makes separation more costly. In contrast, the separation risk should increase if unemployment creates stress and reduces the quality of couple relations. In addition, the effect may not be homogeneous for all couples. If men’s jobs are more consequential for household income and social status, male unemployment may undermine couple stability more than female unemployment. Moreover, low-income couples may be more vulnerable to the negative consequences of unemployment than high-income couples. We analyze the heterogeneous effects of unemployment on separation for Germany, Switzerland and the UK, using household panels that observe couples over time. We innovate by combining fixed-effects regressions with a matching method. This provides us with a control group of comparable couples that did not experience unemployment. For all three countries, our results show a doubling of the separation rate after an unemployment spell: It increases from 2% to 4% per year. This effect does not vary when men or women lose their job. However, contrary to Germany, it is higher for low-income couples than high-income couples in the UK where the welfare state provides only weak income protection to the unemployed.