Loss or Gain from Separation? Wealth and Child Mental Health in Divorce Dynamics

This paper reveals critical heterogeneity in child mental health outcomes following di-vorce, driven by wealth disparities and intersecting racial and gender dynamics. Lever-aging longitudinal PSID and CDS data, we show that children in low-wealth households face a marked rise in mental disabilities post-divorce, exacerbated by parental health de-terioration and economic precarity. In contrast, high-wealth households often experience protective effects, underscoring the buffering power of financial resources. Strikingly, black female-headed households in the low wealth category bear the greatest burden, amplifying systemic inequities. The results highlight divorce as a family transition whose mental health implications depend critically on economic resources, with policy relevance for targeted support to families facing divorce under financial constraint. JEL codes: I14, J12, J13, D31