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Chapter 4 Marriage & the Family Economic Issues and Applications

Chapter 4 Marriage & the Family Economic Issues and Applications. Race & family structure the marriage premium divorce. Race and family structure. % married has fallen for all women especially Black women especially 1970s driven by “never married” more than divorce.

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Chapter 4 Marriage & the Family Economic Issues and Applications

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  1. Chapter 4 Marriage & the FamilyEconomic Issues and Applications • Race & family structure • the marriage premium • divorce

  2. Race and family structure • % married has fallen for all women • especially Black women • especially 1970s • driven by “never married” more than divorce

  3. % children in 2-parent families • drop is steeper for Black children • sharp drop in 1970s

  4. Why? 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

  5. 3 possible explanations • marriage market • women’s wages • welfare system

  6. marriage 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

  7. result: • women less willing to marry men w/out job prospects • is it true? • explains some but not all of marriage decline

  8. incarceration • 20% of Black men between 35-39 have been in prison • (3% white men) • more than have been to college

  9. women’s wages • as women and men are more alike, • gains to specialization fall • gender earnings gap • smaller for Black women • less gains to specialization

  10. 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

  11. The 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

  12. impact of welfare • 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

  13. evidence • 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

  14. Male 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”

  15. Why the premium? • employer discrimination • view married men more favorably • unlikely under competition

  16. division of labor • marriage productivity effect • married men have wife to specialize in nonmarket work (better focus on market work)

  17. 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

  18. marriage premium has fallen since 1970 • less division of labor in HH • decline in marriage overall • marriage/unmarried not as different

  19. evidence about 2 effects • both seem to be important • controlling for selection bias makes premium smaller

  20. evidence supports productivity effect • premium larger for men with wives that do not work • premium rises with length of marriage

  21. Divorce • no-fault divorce • since 1970 • requires no finding of fault • 46 states • unilateral divorce • does not require explicit consent of both parties

  22. 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

  23. 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

  24. for divorce to occur, • gain to marriage were once positive, but turn negative • happening more often than in the past

  25. specialization • gain decline as men and women are more alike in productivity • marriage more vulnerable

  26. rising wages for women • singlehood more attractive for women • increase % never married • increase divorce

  27. probability of divorce • spouses reluctant to specialize • could be penalized if divorce occurs • married women stay in labor force

  28. Economic 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

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