Union dissolution and well-being in Uruguay

Abstract This article provides evidence for Uruguay on the impact of union dissolution (divorce and separation) on a wide set of maternal and household well-being outcomes, based on two waves of a longitudinal study that follows up children that were first graders at public primary schools in 2004. To control for the potential selectivity of union dissolution, we carry out a combined PSM – difference-in-difference estimation and also include a wide set of robustness checks. We find that, for custodial mothers and children, union dissolution entails, in average, a net per capita household income loss of 16%, a 20% decrease in command over durable goods, and a 20% increase in monetary poverty incidence. The income loss is partly mitigated –but not completely offset– by public and private transfers (including child support), and behavioral responses from mothers, mainly through repartnering and increased labor earnings. The period under study was characterized by rapid economic growth, so behavioral responses among separated women had room to be effective. This research contributes to the existing literature on the effects of union dissolution by providing new quantitative estimations for a developing country. At the same time, it carries out a comprehensive analysis of the channels explaining and offsetting the potential net well-being loss.