The effect of relationship breakdown on poverty and social exclusion: the impact of stability of income and control over household expenditure
David de Vaus, Matthew Gray, Lixia Qu and David Stanton
La Trobe University, Australian Institute of Family Studies and Australian National University
Contact Email:   matthew.grayaifs.gov.au

One of the important pathways into poverty and social exclusion for families with dependent children is relationship breakdown. Most research into the impact of relationship breakdown on economic wellbeing has focused on equivalent household income and the likelihood of experiencing income poverty. However, while income measures are correlated with the experience of financial hardship and perceived prosperity, there are differences. Preliminary analysis of Australian longitudinal data reveals that a significant proportion of mothers report a lower rate of financial hardship and higher levels of perceived prosperity despite their equivalent household income being reduced following relationship breakdown.

This paper uses data from the first seven waves of HILDA to explore possible explanations for this finding. These include changes in the stability of income pre and post separation and the extent to which post-separation the resident mother has greater control over the management of the households’ expenditure and management of money.

This research has important implications for understanding the impact of relationship breakdown on poverty and social exclusion. It also has implications for policies aimed at increasing employment rates of mother post-separation and for the equivalence scale literature, which generally assumes that income is allocated across all household members.

Paper Download Information (if available):

Copyright © 2009 Social Policy Research Centre.