Death and Divorce: the Long-term Consequences of Parental Loss*

Two quasi-experiments are used to estimate the impact of parental divorce on the adult incomes and labour market behaviour of children, as well as on their use of social programs, and their marital/fertility behaviour. These involve the use of individuals experiencing the death of a parent, and legislative changes to the Canadian divorce law in 1986. Parental loss by death is assumed to be exogenous; the experiences of children with a bereaved background offering a benchmark to assess the endogeneity of parental loss through divorce. Raw differences between individuals with divorced parents and those from intact and bereaved families significantly overstate the impact of divorce across a broad range of outcomes. When background characteristics are controlled for—most notably the income and labour market activities of parents in the years leading up to the divorce—parental divorce seems to influence the marital and fertility decisions of children, but not their labour market outcomes. Children whose parents divorced tend to put off marriage, and once married suffer a greater likelihood of marital instability, but their earnings and incomes are not much different from others.