Policy Change and Women’s and Men’s Earnings Around Divorce: Evidence from the German Maintenance Reform

Abstract: This paper analyses the impact of divorce on the gross earnings of women and men and investigates how differences in social policy contexts influence these relationships. In particular, it focuses on a policy reform enacted in Germany in 2008 that overturned previous ex-spousal support rules. Data come from the administrative records of the German Public Pension Fund. Drawing on a fixed-effects panel approach with dynamic treatment effects, we examine the earnings trajectories of women and men who separated between 2004 and 2011 (n = 24,135 divorces). We find that women’s earnings increased throughout the divorce process. This pattern was slightly more pronounced after the reform than before. In contrast to women’s earnings, men’s earnings declined throughout the divorce process. After the reform, this decline was less pronounced than before. While divorce was associated with changes in the earnings trajectories of women and men in West Germany, earnings patterns among East German men and women remained largely unchanged around separation, both before and after the reform. The paper concludes by discussing avenues for post-separation policies from a gender perspective.