For Better or for Worse, but How about a Recession?

In light of the current economic crisis, we estimate hazard models of divorce to determine how state and national unemployment rates affect the likelihood of a divorce or separation. With data in the United States over the 1978–2008 period from the 1979 NLSY, we find some evidence indicating that a higher unemployment rate increases the risk of a marriage ending for couples in years 6–10 of marriage (suggesting countercyclical divorce/separation probabilities) but has no significant effect for couples in years 1–5 of marriage and those married longer than 10 years. The estimates are generally stronger in magnitude when using national instead of state unemployment rates and when considering just divorces rather than the first observed divorce or separation. (JEL J12)