chapter 4 marriage & the family economic issues and applications race & family structure the...

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