Trisha Chanda: Debt Trajectories of Divorcing Mothers and Fathers: Heterogeneity by Debt Type and Children’s Physical Custody Arrangements

Time: 15.4.2025 at 14.30-16
Place: PUB KH149

Welcome to an open lecture by INVEST Fellow Trisha Chanda.

Debt Trajectories of Divorcing Mothers and Fathers: Heterogeneity by Debt Type and Children’s Physical Custody Arrangements

Divorce typically constitutes an economic shock in the lives of couples, particularly those with young children. Yet, research has seldom examined the impact divorce has on debt holdings of men and women, and even less is known about the role of children’s post-separation living arrangements therein. We combine individual-level credit reports with court data on divorce cases in Wisconsin to study associations of divorce with debt holdings of mothers and fathers and variation therein by children’s physical custody arrangements—shared or mother-sole placement. We find that debt levels start declining a year before divorce occurs but trend towards baseline levels by the second year following divorce for both parents. Trends in debt holdings reveal considerable heterogeneity by debt type, parent gender, and children’s custody arrangements. Findings suggest that while asset-building debts may smoothen consumption over the economic shock of divorce, divorce may serve as a way to reduce the burden of consumption-oriented debt. Heterogeneity results by children’s living arrangements imply that direct costs of having children in the house may be the mechanism through which debt outcomes differ for parents with shared versus mother-sole custody. Findings have implications for economic wellbeing and income support policies for post-separation households.

You are warmly welcome to attend the lecture!