Divorce and the Business cycle: A cross-country analysis

In this paper, we examine the role of the business cycle in divorce. To do so, we use a panel of 30 European countries covering the period from 1991 to 2010. We find a negative effect of the unemployment rate on the divorce rate, pointing to a pro-cyclical evolution of the divorce rate, even after controlling for socio-economic variables and unobservable characteristics that can vary by country, and/or over time. Results indicate that a one-percentage-point increase in the unemployment rate involves almost 0.02 fewer divorces per thousand inhabitants. The impact is small but significant, representing around 1% of the average divorce rate in Europe during the period considered. Supplementary analysis, developed to explore a possible non-parametric pattern, confirms a clearly negative relationship between unemployment and divorce in European countries, with the inverse relationship being more pronounced when the unemployment rate is greater than 15%.