The history of divorce in Mexico can be traced back to the early twentieth century with gradual reforms following the Mexican Revolution. However, divorce remained an arduous, complex, and infrequent process throughout most of the twentieth century. Notable demographic shifts in the 1970s began to impact divorce rates (Vargas, 2002). The most substantial and sustained increases in Mexico’s divorce rate occurred post-1990s, culminating in 2018 when the no-fault divorce became legal in all Mexican states (Hoehn-Velasco & Penglase, 2021). Table 1 shows the years the unilateral, no-fault divorce legislations were approved by each state.
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Scholars have identified legal, sociological, demographic, and economic factors as key drivers of divorce rates in both developed and less developed countries, offering insights into the factors contributing to Mexico's rising divorce rates.2
One line of inquiry focuses on how legal frameworks influence divorce rates, particularly examining whether more permissive rules lead to higher divorce rates. This perspective finds strong support in the context of Mexico, where the introduction of unilateral, no-fault divorce in 2008 correlates with an increase in divorce rates (Aguirre, 2019; Hoehn-Velasco & Penglase, 2019)3. A similar pattern is observed in the U.S. (Friedberg, 1998; Wolferes, 2006) and Europe (Kneip et al., 2014), where comparable legal reforms led to higher divorce rates.4
Another avenue of research delves into sociological and demographic explanations of divorce, with a focus on how shifting g demographics and gender roles may impact divorce rates. The independence hypothesis suggests that increased female labor force participation and reduced fertility rates empower women economically, leading to higher divorce rates when faced with an unsatisfactory marriage. Empirical evidence in Mexico supports this theory, demonstrating that female empowerment correlates with higher divorce rates (Loria and Salas, 2019; Bobonis, 2011).5 These findings resonate with studies from other regions, including sub-Saharan Africa (Clark and Brauner-Otto, 2015) and the U.S. (Oppenheimer et al., 1995; McCrate, 1992). However, Sayer and Bianchi (2000) highlight that in the U.S. the impact of women’s economic participation on marital decisions has evolved over time and no longer responds as it did when women first entered the labor force in large numbers.
Economic explanations of divorce center on individuals making marital decisions based on financial considerations based on Becker’s (1973) seminal work, which argued that couples marry because of the economic gains (relative to remaining single), such as the productivity gains from household specialization and division of labor. This economic perspective explores two competing arguments: the relational-psychological stress perspective and the relative cost perspective (Amato & Beattie, 2011; Fischer & Liefbrper, 2006).6 The former argues that unfavorable economic conditions, such as unemployment or income loss, strain family dynamics, increasing the risk of divorce. In contrast, the relative cost perspective contends that bad economic downturns deter divorces because the cost of dissolving a marriage rises. The literature presents mixed results, with some studies finding negative income shocks increase the likelihood of divorce (Weiss & Wills, 1997; Boheim & Ermisch, 2001), while others suggest that higher unemployment reduces the probability of divorce (Bowlus & Seitz, 2006; Amato & Beattie, 2011; Hellerstein & Morrill, 2011; Schaller, 2013; González-Val & Marcén, 2016).
Until recently, few studies examined the competing economic perspectives in light of the real estate market and housing prices. The collapse of housing prices during the 2008 recession, especially in the United States (U.S.) and the United Kingdom (U.K.), prompted newer studies on this relationship. Some of these studies suggest that negative price shocks decrease the probability of divorce, supporting the relative cost perspective (Farnham et al., 2011; Harknett and Schneider, 2012). In contrast, others find that negative house price shocks increase the likelihood of divorce, aligning with the relational-psychological stress perspective (Rainer and Smith, 2010; Klein, 2017).
Fewer scholars have examined the relationship between housing prices/cost and divorce rates in less-developed countries; the few that have analyzed it have found a positive relationship. Farzanegan and Gholipour (2016) and Gholipour (2016), for instance, find that in the Middle East and Northern Africa, higher housing costs lead to increases in divorces, supporting the relational-psychological stress perspective. Zheng et al. (2018) find a similar positive relationship for China as does Chae (2020) for South Korea, although they find a negative relationship between rental prices and divorce.
Notably, among the growing literature on divorce for Mexico, there is a gap in the literature concerning the relationship between the real estate market and divorce rates. Indeed, while macroeconomic factors have been considered as control variables in Mexican divorce studies, they have not been the central focus of analysis.7 This paper aims to address this gap by examining the link between economic conditions, specifically unexpected housing price shocks, and the decision to divorce in Mexico.
Our study explores the impact of unexpected price shocks on Mexico’s divorce rate, recognizing the pivotal role of the unexpected element of economic change in shaping marital decisions. We are guided by Becker et al. (1977) argument that, “...the majority of divorces result from uncertainty and unfavorable outcomes and, therefore, would not occur in a world where outcomes could be anticipated” (p.1144). Based on this logic, we posit that unexpected increases in wealth (positive house price shocks) and unexpected decreases in wealth (negative house price shocks) are likely to shape individuals’ marital calculations. Recognizing the mixed findings in the literature, we do not specify the direction of this empirical relationship between unexpected housing price shocks and divorce. Instead, we consider the potential influence of income inequality and kinship networks, two unique characteristics of the Mexican context, on this relationship.
Mexico’s economy presents a compelling case for analyzing divorce dynamics. The housing market has witnessed sustained growth over the last two decades, with real estate becoming the primary asset held by Mexican households (García et al., 2022). This emphasizes the significance of unexpected housing price shocks as a factor in marital decisions. Additionally, Mexico’s pronounced income inequality (Lambert & Park, 2019) prompt us to investigate whether individuals across different income levels might react differently to unexpected price shocks. Our hypothesis is rooted in Klein’s (2017) finding, which suggests that younger couples with lower educational attainment and lower family income drive the relationship between housing market changes and divorce. We anticipate that unexpected positive house price shock may increase the likelihood of divorce among low-income households in Mexico, unlike the U.S. findings. This hypothesis is shaped by the presence of kinship networks and a robust informal housing market, which offer alternative housing options and financial resources that facilitate divorce and might be significant for lower-income Mexicans.
Kinship networks are a critical component of cultural and social structures in Mexico (Fussell & Palloni, 2004; Villareal & Shin, 2008). We posit that cultural and social structure may influence individuals’ decisions to divorce in the wake of unexpected positive house price shocks. Such networks provide a social safety net and free up unexpected wealth to use for the legal dissolution of a marriage. Kinship networks provide, for instance, the possibility of moving into households headed by others, such as parents or other relatives. While the prevalence of informal or irregular settlements in Mexico (Ward, 2021; Lombard, 2016; Connolly, 2009), may influence individuals’ marital calculations by providing an alternative housing option that frees up unexpected wealth to use for divorce.
Conversely, we posit that high-income couples in Mexico (couples with a college degree), akin to their counterparts in developed countries, may be more reluctant to divorce when faced with an unexpected positive house price shock. The financial costs associated with divorce, including legal fees, moving expenses, and property division, may outweigh the benefits of the housing windfall. As a result, we expect marriages to be more stable for these couples.
These expectations are underpinned by our understanding of the Mexican context, where income inequality and kinship networks play a pivotal role in shaping individuals’ marital calculations. This more nuanced analysis can inform our understanding of the relationship between the real estate market and divorce rates. The subsequent section outlines our theoretical model and methodology testing these relationships.