5 Feb 2015 | Research papers
Australian Institute of Family Studies
Dr Hayley Fisher explores the interaction between institutional support, repartnering and the economic impact of relationship breakdown.
Relationship breakdown has economic costs: one household is split into two, and its income is also divided. The costs are disproportionately borne by women (Fisher & Low, 2009; de Vaus et al., 2014), who often lose more than half the household’s income yet retain the majority of the financial responsibility for children.
The negative financial shock of relationship breakdown is, however, rarely permanent. In the short term, separated women may benefit from social welfare policies and receive private transfer payments including child support. As time passes, if repartnering occurs this can aid the economic recovery process.
A recent analysis of the British Household Panel Survey (BHPS) and the Household, Income and Labour Dynamics in Australia (HILDA) Survey has revealed new insights into the interaction between institutional support, including welfare payments and child support rules, and repartnering as a way of mitigating the negative economic shock of relationship breakdown.
These surveys track individuals through time, recording income sources and partnering decisions. We compared the experiences of women who have been through a relationship breakdown in England and Wales to those in Australia.
Patterns of household income after relationship breakdown are similar in the two samples. Average income, adjusted for household size to reflect the higher per person costs of smaller households, fell by 27% for women in both samples on relationship breakdown. Over the following five years, women’s average household incomes recovered to around 90% of the pre-separation level, with no statistically significant differences between the two samples throughout the recovery period.
A closer examination of the data, however, shows that this similarity is superficial. We found that women in England and Wales repartner more quickly than those in Australia. Two years after relationship breakdown, 22% of women in England and Wales are living with a new partner, compared to just 12% of Australian women. Four years later, this difference persists, with 42% of women in England and Wales and 31% of Australian women living with a new partner.
The corollary to this difference in repartnering is a difference in the income that those new partners bring to the household. In Australia, women have new partners who contribute a higher proportion of household income: 58% compared to 50% for women in England and Wales.
A further difference across the two countries is in government benefits and private transfer income. In Australia, both of these are more responsive to relationship breakdown than in England and Wales. Household benefit income increases by 23% on average in Australia, compared to 13% in England and Wales. Despite around 64% of women in both samples having children, private transfer income, largely made up of child support payments, is received by 34% of Australian women and just 26% of women in England and Wales.
These results suggest that government payments and the child support system in Australia provide more effective transitional support for separating women. One interpretation is that this additional support allows women to take time to recover from relationship breakdown and begin to repartner. In contrast, the lower level of support in England and Wales does not provide this transitional support and leads to faster repartnering.