Heterogeneity in Family Life Course Patterns and Intra-Cohort Wealth Disparities in Late Working Age

Altres ajuts: Centre of Excellence for Children and Families over the Life Course, Australian Research Council (AU); https://doi.org/10.13039/501100001659 (LE 3612/2-1 CE140100027) ; Deutsche Forschungsgemeinschaft ; CERCA Programme/Generalitat de CatalunyaConsidering soaring wealth inequalities in older age, this research addresses the relationship between family life courses and widening wealth diferences between individuals as they age. We holistically examine how childbearing and marital histories are associated with personal wealth at ages 50-59 for Western Germans born between 1943 and 1967. We propose that deviations from culturally and institutionally-supported family patterns, or the stratifed access to them, associate with diferential wealth accumulation over time and can explain wealth inequalities at older ages. Using longitudinal data from the German Socio-Economic Panel Study (SOEP, v34, waves 2002-2017), we frst identifed typical family trajectory patterns between ages 16 and 50 with multichannel sequence analysis and cluster analysis. We then modelled personal wealth ranks at ages 50-59 as a function of family patterns. Results showed that deviations from the standard family pattern (i.e. stable marriage with, on average, two children) were mostly associated with lower wealth ranks at older age, controlling for childhood characteristics that partly predict selection into family patterns and baseline wealth. We found higher wealth penalties for greater deviation and lower penalties for moderate deviation from the standard family pattern. Addressing entire family trajectories, our research extended and nuanced our knowledge of the role of earlier family behaviour for later economic wellbeing. By using personal-level rather than household-level wealth data, we were able to identify substantial gender diferences in the study associations. Our research also recognised the importance of combining marital and childbearing histories to assess wealth inequalities

The male marital earnings premium contextualized: Longitudinal evidence from the United States, Germany, and the United Kingdom

Objective To examine the effect of marriage entry on annual net rather than gross earnings across different institutional settings. Background Previous research focused on men's gross wage marital premium to explore whether selection or specialization explains premiums. However, gross wages do not reflect disposable resources because taxes still have to be deducted. As the tax treatment varies across countries and by marital status, it is also relevant to consider such aspects. Method We use panel data from the United States (PSID), Germany (SOEP), and the United Kingdom (UKHLS) to examine annual male net earnings changes over marriage entry using fixed effect models with individual slopes. The models enable us to assess marriage-related net earnings while adjusting for heterogeneous age slopes before marriage in addition to any time-constant heterogeneity. Our sample contains 3244 US men, 4581 German men, and 7140 British men. Results Our results reveal a male marital net earnings premium only in Germany—a country with sizeable institutional marriage privileges. We go on to show heterogeneity in marriage effects by cohort, partner's education, and children. Results highlight that men from earlier cohorts and those married to partners with low education tend to benefit more. Conclusion Results add novel insights to our understanding of marital premiums and highlight the relevance of tax policy contexts as an institutional driver underlying marital premiums.Peer Reviewe

Relationship separation and length of time in receipt of income support payments: a longitudinal analysis of Australian Government administrative data

In recent years, the Australian government has encouraged open access to administrative data, providing new opportunities to examine life course pathways and evaluate social policies, particularly those aimed at supporting minority populations such as single parent families. Expenditure on government income support in Australia is expected to rise, largely due to increasing costs associated with an ageing population and the introduction of a national disability insurance scheme, raising concerns about the long-term fiscal viability of government spending on welfare. This paper investigates the association between income support receipt and relationship breakdown using two potential sources of national data: administrative data on income support payments and the Households, Income and Labour Dynamics in Australia panel survey. A comparative approach showed that the administrative data provided much greater statistical power for detecting associations for minority groups than was possible with panel data highlighting the importance of administrative data for understanding the outcomes of such groups

Marital Dissolution and Personal Wealth: Examining Gendered Trends across the Dissolution Process

Objective This study examined potentially gendered net worth changes over the marital dissolution process, starting up to 3 years prior to separation and continuing up to 15 years postdivorce. Background Incipient literature showed steep wealth declines for men and women associated with divorce, treating marital dissolution as a single point-in-time event. These findings may be limiting as legal regulations and divorce-stress-adjustment research conceptualize marital dissolution as a process that lasts several years. Method Using fixed effects regression models, we analyzed changes in personal net worth as well as changes in personal net housing worth and financial net worth of individuals whose marriages dissolved between 2002 and 2017. Analyses used comprehensive wealth data from the German Socio-Economic Panel study. Results Although wealth declines commenced prior to separation, separation was the most critical point with 82% and 76% reductions in personal wealth of men and women, respectively. Divorce did not pose additional wealth penalties, but wealth was also not recovered in years after divorce. The lasting separation penalty was mainly driven by declines in housing wealth and a lack of financial wealth recovery. Overall, both men and women experienced dramatic relative wealth declines with negligible gender differences. Predicted wealth levels, however, indicated that men may be in a financially better position compared to women due to higher preseparation wealth levels. Conclusion Results illustrated important variations in personal wealth measures over the marital dissolution process, which may drive lasting wealth inequalities, particularly with regard to housing wealth for both men and women.Peer Reviewe

May your wealth be easily divisible by two: marital dissolution and personal wealth of German men and women over the life course

Wealth provides advantages above those provided by earnings including the access to an objective and subjective economic buffer during financial hardship (Spilerman, 2000). However, individuals differ greatly in their ability to generate and maintain wealth (Killewald, Pfeffer, & Schachner, 2017). The lack of sufficient private wealth is becoming progressively problematic, as even countries with generous welfare systems, such as Germany, have increasingly emphasised personal economic responsibility throughout the life course (Seeleib-Kaiser, 2016). It is thus urgent to understand the factors that disrupt individuals’ wealth accumulation given their implications for the economic wellbeing of the population in forthcoming years.While family dynamics have been recognised as a source of stratification (McLanahan & Percheski, 2008), marital dissolution has received little attention within wealth stratification research despite this event being linked to a range of financial – and potentially wealth-relevant – burdens (e.g. relocation costs, administrative divorce costs). This thesis investigates the association between marital dissolution and wealth of men and women in Germany. I thereby expand on an incipient body of US research that found that marital dissolution is associated with substantially lower household or per-capita wealth (e.g. Zagorsky, 2005; Zissimopoulos, Karney, & Rauer, 2015). These studies, however, almost exclusively used cross-sectional data and static theories, although the processes linking marital dissolution and wealth are likely dynamic, with important wealth-related processes taking place before and after marital separation and divorce. Furthermore, due to data restrictions, previous studies insufficiently considered gender differences although the economic outcomes of marital dissolution, at least for income, have been shown to differ between men and women. To address these shortcomings in previous research, I aim to (a) explain how marital dissolution affects individuals’ wealth levels and wealth accumulation, including immediate and long-term outcomes, and (b) explore how, and to what degree, the association between marital dissolution and wealth is gendered.I rely on three methodological and theoretical developments to address these aims. First, I draw on the life course framework, which provides a set of heuristics that acknowledge patterns of stability and change. Second, addressing limitations of static methods applied in previous research, I build on statistical methods that provide more appropriate tools to analyse patterns of progression, individual change, and dynamic processes. My quantitative approach includes panel regressions and sequence analysis. Third, I rely on novel longitudinal wealth data from the German Socio-Economic Panel (SOEP). These data are unique in that they were collected separately for each household member (i.e. at the personal level), which enable a gender-sensitive approach.My thesis highlights a range of key findings: First, marital dissolution is associated with a substantial immediate wealth penalty for both men and women. Examining changes in wealth along the multi-stage process of marital dissolution (i.e. anticipation of the dissolution of the marriage, separation of the marital household, legal divorce, post-divorce adjustment), it becomes evident that the majority of wealth, and particularly housing wealth, is lost during marital separation. Administrative divorce costs add no additional wealth penalty. Second, although both men and women experience substantial personal wealth penalties and end up with similar housing wealth levels, divorced women hold lower financial wealth. Despite common public perceptions that all available resources are divided equally at divorce, some within-couple wealth inequalities – particularly in financial wealth – are maintained in line with legal regulations. Thus, women endure a financially more precarious position after divorce. Third, previous experiences of marital dissolution are commonly associated with substantially lower wealth in late working age for both men and women, although women are more disadvantaged. Finally, lower wealth of ever-divorced men and women in late working age compared to continuously married men and women is a direct result of the immediate wealth shocks experienced around marital dissolution rather than divorcees’ differences in wealth accumulation rates after divorce. Thus, results also highlight that divorcees cannot compensate initial shocks over time. Furthermore, selection effects by which those with less wealth are disproportionately more likely to divorce, can partially explain divorced men’s initial wealth gaps but not the gap for women.I conclude that marital dissolution is a life course event that importantly influences men’s and women’s wealth standings and prospects. More precisely, it is associated with substantial reductions in men’s and women’s personal wealth with lasting economic repercussions for the majority of divorcees. This can, for instance, have flow-on effects on divorcees’ social participation, welfare reliance, or their social network. Deflated wealth by implication also has economic consequences for children, as divorced parents likely have fewer resources that can be passed down. Although my thesis provides an important first step towards a more thorough understanding of the economic consequences of marital dissolution for private wealth, more research is needed to explicate potential within and across country heterogeneity. Overall, my thesis highlights the importance to include wealth in addition to income when assessing the economic wellbeing of divorced families