Australian divorced couples hit less hard financially than overseas counterparts

Australian divorced couples hit less hard financially than overseas counterparts

Media release — 1 August 2014

New analysis has shown that Australian couples emerge less hard hit financially by divorce than in four other developed countries.

Data to be presented to the 13th Australian Institute of Family Studies conference today, confirms that only in Switzerland do couples fare better financially post-divorce than in Australia.

Despite that, the impact of separation on household income remains greater for women than men in all countries except Britain, where separation negatively affected the finances of men and women to much the same extent.

Researchers from AIFS and the Australian National University compared the financial consequences of relationship breakdown for men and women in six OECD countries – Australia, the United States, Britain, Germany, Switzerland and Korea.

AIFS Senior Research Fellow, Dr Lixia Qu, said the reasons for the different financial impacts of separation in different countries are not straightforward and are linked to a combination of factors.

“Of all six countries, Australia had the second best outcomes for separated women six years after separation, with the heaviest financial burden falling on women in the United States,” Dr Qu said.

“Australian women’s financial viability after separation were linked to high levels of government income support; continuing workforce participation; modest levels of child support received from the other parent; and their tendency to re-partner.

“However, there is no single characteristic or set of characteristics that produces a better outcome for separated women. Improving one, or any of these factors should improve the outcomes for separated women.

“For example, the United States had the worst outcome for separated women linked to low levels of government income support; low minimum wages; and only modest rates of re-partnering.

“By contrast, Switzerland had the best outcomes for women post divorce in spite of comparatively low government expenditure.

“This was due to high levels of Swiss child support payments from the other parent; high labour force participation; high wages and high rates of re-partnering.”

Co-researcher ANU Professor Matthew Gray said the research also confirmed that Australian women continue to experience a sharp decline in their household income following divorce and separation.

The analysis showed that one year after separation, women’s household income declined sharply in Australia and across all six OECD countries, compared to men, followed by some recovery six years later.

“In Australia, one year after separation, separated women had an equivalised income (adjusted for the number of household members) 21 per cent lower than comparable non-separated women,” Professor Gray said.

“Meanwhile men in that first year, had an equivalised household income broadly the same as nonseparated men.

“But six years after separation, the income of separated Australian women recovered somewhat so that it was 12 per cent lower than comparable non-separated women.

“The income hit experienced by separated Australian women six years after separation was less than countries such as the US where it was 37 per cent lower, Germany 23 per cent lower and Britain 17 per cent lower than comparable non-separated women.

“In Britain, US and Germany, separated men were substantially worse off than non-separated men: in Britain they were 18 per cent worse off; in Germany 13 per cent worse off; and in the USA 11 per cent worse off. In Australia the negative impact was slight – just 1 per cent. Only in Switzerland did men emerge financially better off.”

The research presentation ‘Consequences of relationship breakdown: a comparative analysis’ by AIFS Senior Research Fellow, Professor David de Vaus, ANU’s Professor Matthew Gray, AIFS Senior Research Fellow, Dr Lixia Qu and ANU Visiting Fellow David Stanton will be presented at the 13th Australian Institute of Family Studies Conference Families In A Rapidly Changing World being held at the Melbourne Convention Centre from July 30 to 1 August.

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