Chapter 4 Marriage & the FamilyChapter 4 Marriage & the FamilyEconomic Issues and ApplicationsEconomic Issues and ApplicationsChapter 4 Marriage & the FamilyChapter 4 Marriage & the FamilyEconomic Issues and ApplicationsEconomic Issues and Applications
• Race & family structure
• the marriage premium
• divorce
• Race & family structure
• the marriage premium
• divorce
71.4
8.8
41
29.3
0
20
40
60
80
white black
Women age 40-44 2002
% married, spousepresent
% never married
77
17.7
42.8 51.2
0
20
40
60
80
white black
Families with children < 18 2002
% 2-parent
% female-headed
74.5
17.9
38.5 48.1
0
10
20
30
40
50
60
70
80
white black
All Children, 2002
% residing w/ bothparents
% residing w/mothersonly
Race and family structureRace and family structureRace and family structureRace and family structure
• % married has fallen for all women especially Black women
• especially 1970s
• driven by “never married” more than divorce
• % married has fallen for all women especially Black women
• especially 1970s
• driven by “never married” more than divorce
• % children in 2-parent families drop is steeper for Black children sharp drop in 1970s
• % children in 2-parent families drop is steeper for Black children sharp drop in 1970s
Why? rational choiceWhy? rational choiceWhy? rational choiceWhy? rational choice
• gains to marriage have fallen
and/or
• quality of single life is better
• must be true especially for Black men and
women especially in 1970s
• gains to marriage have fallen
and/or
• quality of single life is better
• must be true especially for Black men and
women especially in 1970s
3 possible explanations3 possible explanations3 possible explanations3 possible explanations
• marriage market
• women’s wages
• welfare system
• marriage market
• women’s wages
• welfare system
marriage marketmarriage marketmarriage marketmarriage market
• less-skilled men have fared worse in labor markets since 1970s lower real wages higher unemployment affects Black men more
• lower levels of education
• less-skilled men have fared worse in labor markets since 1970s lower real wages higher unemployment affects Black men more
• lower levels of education
• result: women less willing to marry men
w/out job prospects
• is it true? explains some but not all of
marriage decline
• result: women less willing to marry men
w/out job prospects
• is it true? explains some but not all of
marriage decline
incarcerationincarcerationincarcerationincarceration
• 20% of Black men between 35-39 have been in prison (3% white men) more than have been to college
• 20% of Black men between 35-39 have been in prison (3% white men) more than have been to college
women’s wageswomen’s wageswomen’s wageswomen’s wages
• as women and men are more alike, gains to specialization fall
• gender earnings gap smaller for Black women
• less gains to specialization
• as women and men are more alike, gains to specialization fall
• gender earnings gap smaller for Black women
• less gains to specialization
• wages for all women have risen, increasing gains to being single, decreasing supply of women to
marriage• decreasing marriage
wage increase for Black women has been larger
• wages for all women have risen, increasing gains to being single, decreasing supply of women to
marriage• decreasing marriage
wage increase for Black women has been larger
The welfare systemThe welfare systemThe welfare systemThe welfare system• AFDC
cash welfare benefits (replaced by TANF in 1996) mostly for low-income single-mother
families
• AFDC payments are very low an attractive option only to those w/
limited job skills
• AFDC cash welfare benefits (replaced by TANF in 1996) mostly for low-income single-mother
families
• AFDC payments are very low an attractive option only to those w/
limited job skills
• for low-skilled women welfare may be more attractive than
marriage OR work• incentive for out-of-wedlock children• incentive for divorce
Black women have lower education levels
• for low-skilled women welfare may be more attractive than
marriage OR work• incentive for out-of-wedlock children• incentive for divorce
Black women have lower education levels
impact of welfareimpact of welfareimpact of welfareimpact of welfare
evidenceevidenceevidenceevidence
• not a lot
• family trends increased in 1970s, but real value of welfare benefits
fell at same time % Black children on welfare has
been stable
• not a lot
• family trends increased in 1970s, but real value of welfare benefits
fell at same time % Black children on welfare has
been stable
Male Earnings & MarriageMale Earnings & MarriageMale Earnings & MarriageMale Earnings & Marriage
• we observe that married men earn more than unmarried men 10-25% more when controlling for
other differences
(like age, education…) “male marriage premium”
• we observe that married men earn more than unmarried men 10-25% more when controlling for
other differences
(like age, education…) “male marriage premium”
$18,001$15,779
$36,920
$17,717
$29,892$23,595
$0
$10,000
$20,000
$30,000
$40,000
single married divorced
Median Income, 2001Men Women
Why the premium?Why the premium?Why the premium?Why the premium?
• employer discrimination view married men more favorably unlikely under competition
• employer discrimination view married men more favorably unlikely under competition
• division of labor marriage productivity effect married men have wife to
specialize in nonmarket work
(better focus on market work)
• division of labor marriage productivity effect married men have wife to
specialize in nonmarket work
(better focus on market work)
• selection bias marriage selectivity effect men who are married differ from
those who are not• responsible, motivated, etc.
qualities that lead to marriage also lead to job success
• selection bias marriage selectivity effect men who are married differ from
those who are not• responsible, motivated, etc.
qualities that lead to marriage also lead to job success
• marriage premium has fallen since 1970 less division of labor in HH decline in marriage overall
• marriage/unmarried not as different
• marriage premium has fallen since 1970 less division of labor in HH decline in marriage overall
• marriage/unmarried not as different
evidence about 2 effectsevidence about 2 effectsevidence about 2 effectsevidence about 2 effects
• both seem to be important controlling for selection bias
makes premium smaller
• both seem to be important controlling for selection bias
makes premium smaller
• evidence supports productivity effect premium larger for men with wives
that do not work premium rises with length of
marriage
• evidence supports productivity effect premium larger for men with wives
that do not work premium rises with length of
marriage
DivorceDivorceDivorceDivorce
• no-fault divorce since 1970 requires no finding of fault 46 states
• unilateral divorce does not require explicit consent
of both parties
• no-fault divorce since 1970 requires no finding of fault 46 states
• unilateral divorce does not require explicit consent
of both parties
8.9
22.8 20
0
5
10
15
20
25
1958 1982 2000
Divorces per 1000 Marriages
8.9
22.8 20
0
5
10
15
20
25
1958 1982 2000
Divorces per 1000 Marriages
3.4 2.7
10
7.4
16.3
13.2
0
5
10
15
20
1950 1980 2000
% divorced, 35-59
women
men
• with 1% annual divorce rate 25% of marriages end w/in 30
years
• with 2% annual divorce rate 45% of marriages end w/in 30
years
• with 1% annual divorce rate 25% of marriages end w/in 30
years
• with 2% annual divorce rate 45% of marriages end w/in 30
years
Why?Why?Why?Why?
• gains to marriage fall to point where better off single
• when will this happen? total benefits of marriage <
total benefits of two as singles
• gains to marriage fall to point where better off single
• when will this happen? total benefits of marriage <
total benefits of two as singles
for divorce to occur,for divorce to occur,for divorce to occur,for divorce to occur,
• gain to marriage were once positive, but turn negative happening more often than in the
past
• gain to marriage were once positive, but turn negative happening more often than in the
past
specializationspecializationspecializationspecialization
• gain decline as men and women are more alike in productivity marriage more vulnerable
• gain decline as men and women are more alike in productivity marriage more vulnerable
rising wages for womenrising wages for womenrising wages for womenrising wages for women
• singlehood more attractive for women increase % never married increase divorce
• singlehood more attractive for women increase % never married increase divorce
probability of divorceprobability of divorceprobability of divorceprobability of divorce
• spouses reluctant to specialize could be penalized if divorce
occurs married women stay in labor force
• spouses reluctant to specialize could be penalized if divorce
occurs married women stay in labor force
Economic consequence of divorceEconomic consequence of divorceEconomic consequence of divorceEconomic consequence of divorce
• women’s economic status falls by 20-25%
• men’s economic status rises by 10%
• no-fault, unilateral divorce led to lower divorce settlements
for women• property, alimony
• women’s economic status falls by 20-25%
• men’s economic status rises by 10%
• no-fault, unilateral divorce led to lower divorce settlements
for women• property, alimony
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