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Children, and nations, of divorce

Changing family law can increase school enrollment, and economic development

January 27, 2020

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Children, and nations, of divorce key image
Sasi Ponchaisang / EyeEm

Article Highlights

  • Legalizing divorce in Chile fueled school enrollment rates

  • More marriage negotiating power improved mothers’ access to resources

  • Family law reform can affect national development

Children, and nations, of divorce

The impact of divorce on a couple’s children is of paramount concern to parents, of course, but policymakers should also pay attention: Divorce might have far-reaching consequences for a nation’s economy as well.

New research on educational attainment in Chile finds that after divorce was legalized in Chile in 2004, children enrolled in school at significantly higher rates. The results suggest that changes in family law can affect the course of national development just as explicit economic growth policies do.

After divorce was legalized in Chile in 2004, children enrolled in school at significantly higher rates … anywhere from 3.4 to 5.5 percentage points, even more for older children.

In an October 2019 working paper from the Opportunity & Inclusive Growth Institute (iwp 27), visiting scholar Misty Heggeness, an economist with the U.S. Census Bureau, studies the effects that changes in family law have on child welfare by analyzing the impact of Chile’s experience with divorce. She discovers that the divorce law resulted in significant educational improvement. “Implementing pro-homemaker divorce laws increased school enrollment anywhere from 3.4 to 5.5 percentage points,” writes Heggeness. The impact was even stronger for older children, those in secondary school.

And because better-educated children are more productive adults, she contends, divorce policy can improve prospects not just for the child and family, but for the nation. “Introducing a path to legal divorce induced changes in household bargaining that lead to improvements in child welfare, advancing economic development through investments in children’s education.”

Access to divorce—accompanied by mandated compensation—shifts the balance of power over resources toward mothers, [who are] more likely to encourage [their children] to attend school.

Why would the possibility of divorce lead to higher rates of schooling? At heart, the idea is that access to divorce—accompanied, crucially, by mandated compensation from breadwinners to homemakers for unpaid work while married—shifts the balance of power over household resources toward mothers. Because mothers in many nations, including Chile, invest more in children, at least in the short run, they are more likely to encourage them to attend school.

Education through compensation

Whatever its demographic impact and emotional toll, access to divorce in Chile powerfully affected bargaining power within marriages. A key element of the Civil Marriage Act of 2004 is its requirement that breadwinners (usually husbands) compensate spouses for wages forgone by working at home rather than in the formal labor market. This compensation could be paid in a cash lump sum or through monthly installments.

Heggeness theorizes that Chile’s divorce law gave more bargaining power to wives by raising their opportunity cost of remaining married and lowering it for husbands. The promise of compensation for years of unpaid labor provided a fulcrum in marriage negotiation. It meant that homemakers had less to lose from leaving and greater clout if they stayed.

Homemakers who remained married used this clout to allocate resources to their children, including increased emphasis on education. (Research has documented that mothers in some countries invest more than fathers in household goods such as children’s education and clothing.) The divorce option may thus have indirectly boosted school enrollment.

Speed of implementation increases the credibility of a spouse’s threat of divorce. The data reveal that longer wait times significantly decrease school enrollment rates.

She uses another aspect of Chile’s legal system to explore the influence of divorce settlement speed. How quickly divorces are finalized might affect bargaining between spouses contemplating an end to marriage. Divorce settlement speed varies geographically in Chile because at the same time the act was passed, a family court system was created. Each court established its own management procedures and faced different caseload burdens.

To carry out her analysis, Heggeness uses survey data collected by the University of Chile and Chilean government in 2002, 2004, and 2006 to follow individuals and their households over time. She combines it with family court administrative divorce records. The result is a set of school-age children whose parents were married or cohabiting—a database of over 17,000 children, 14,362 of them from married-parent families and 2,744 from cohabiting parents.

Getting schooled

The distinction between married and cohabiting parents is crucial to the analysis. Heggeness compares enrollment trends between children from these two comparable groups, differing in that divorce law affects only married couples.

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Prior to 2004, rates of school enrollment are similar for the two groups, both declining slightly but with no significant trend differential. (See figure.) After divorce was legalized, however, the trend lines diverged. By 2006, children of married parents were enrolling at rates 3.3 percentage points higher than those of cohabiting parents (holding age and gender constant). Girls increased school enrollment more than boys, by almost a full percentage point. (Not shown in figure.)

Determining the impact of divorce finalization speed is Heggeness’ second goal. Due to variation in administrative efficiency and caseload burdens, there is a wide range in divorce wait times, from same-day divorces to well over three years, for cases ending between October 2005 and 2006.

Heggeness’ notion is that speed of implementation increases the credibility of a spouse’s threat of divorce. A wife’s threat to leave may seem less convincing if the legal reality is a distant prospect. Faster implementation can increase plausibility. Intuitively, since legalizing divorce increases enrollment rates, providing quick access to it should do the same. Lengthy wait times, in contrast, reduce divorce credibility and decrease the opportunity costs of remaining married for homemakers.

The data back the hypothesis, revealing that longer wait times significantly decrease school enrollment rates. “Every six-month increase in wait time to finalize a divorce results in an approximate one percentage point (0.9) decrease in school enrollment.”

Which children benefit most from access to divorce? Heggeness finds that older children—those in secondary school—enrolled at higher rates after legalization, but primary school children experienced no change. The finding “makes sense,” she writes, since school is compulsory and poor families would gain only from encouraging employable (older) children to seek work rather than education. That jibes with the finding that the law had a slightly larger impact in urban areas, where paid jobs for teens might be more available.

It’s a convincing argument for looking beyond conventional routes for economic development.

In fact, narrowing the focus just to the secondary level, Heggeness finds considerably greater impact. Secondary school enrollment rates climbed between 5.1 and 9.0 percentage points after 2004; delaying divorce implementation by six months decreased secondary enrollment by 1.7 percentage points.

Conclusion

Heggeness’ research establishes that after Chile enacted its divorce law with compensation, school enrollment rates increased significantly, particularly for secondary school students. Quicker divorce settlement led to higher enrollment rates. The link between access to divorce and school enrollment is bargaining power between spouses, according to the economist. By shifting marriage negotiating power to homemakers, the possibility of divorce improves mothers’ access to household resources, leading to more investment in children. Speeding implementation of that law amplifies the effect.

It’s a convincing argument for looking beyond conventional routes for economic development like infrastructure projects. “When contemplating development policies,” concludes Heggeness, “advocates, policymakers, and leaders should not overlook the impact changes in family policies and administrative processes can have on advancements in child welfare and, ultimately, economic development.”

Douglas Clement
Managing Editor

Douglas Clement is a managing editor at the Minneapolis Fed, where he writes about research conducted by economists and other scholars associated with the Minneapolis Fed and interviews prominent economists.