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This study investigates whether shifts in the unemployment rate affect the separation probability of married and cohabiting couples. Compared to the match quality shocks utilised in the existing literature, unemployment rate movements are plausibly exogenous and affect individuals through both actual as well as potential loss of a job. I find that a rise in the unemployment rate in the wife's sector increases the odds of a separation among cohabiting (de facto) couples but not among married (de jure) couples. A doubling of the female partner's or male partner's three-period lagged unemployment rate leads to a almost doubling of the separation rate among the de facto couples.
