On The Causes and Consequences of Divorce

This thesis consists of three papers that investigate the labour market activity of women following a divorce and discuss the possible causes of divorce from theoretical and empirical perspectives. One of the consequences of divorce for women with dependent children who are not fully employed in labour market, is a major loss of income and decrease in their well-being. For the past decades more married women became active in labour market, however their employment choice remains an interesting question which has been broadly addressed in the literature. With a focus on British Households during 1991 to 2008, the first chapter of this dissertation studies the employment rate among women who experience divorce. At the intensive margin, findings of this chapter suggest that labour supply increases after divorce. At the extensive margin the results suggest that probability of working part time decreases for women who do not hold a university degree whereas for women with a higher education degree, the probability of full time employment increases. The second chapter studies causes of divorce by focusing on Search and Matching theoretical framework. Despite a number of studies that suggest re partnering is the driving force of divorce, the �findings of this chapter do not agree with the prediction of such models and instead argues that odds of separation are higher among couples in which both spouses have low productivity levels. Continuing the discussion of previous chapter, chapter 3 reviews the welfare system of United Kingdom for the period of 1991 to 2008 and investigates the effect of tax and benefit system on probability of marital dissolution. The results of this chapter suggest that increase in benefit entitlement after divorce, to some extent explains the observed rate of marital dissolution specially among low productive households.