chapter 4 marriage & the family economic issues and applications race & family structure the...
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![Page 1: Chapter 4 Marriage & the Family Economic Issues and Applications Race & family structure the marriage premium divorce Race & family structure the marriage](https://reader036.vdocuments.net/reader036/viewer/2022062313/56649d575503460f94a35e5e/html5/thumbnails/1.jpg)
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
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71.4
8.8
41
29.3
0
20
40
60
80
white black
Women age 40-44 2002
% married, spousepresent
% never married
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77
17.7
42.8 51.2
0
20
40
60
80
white black
Families with children < 18 2002
% 2-parent
% female-headed
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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
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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
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• % 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
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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
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3 possible explanations3 possible explanations3 possible explanations3 possible explanations
• marriage market
• women’s wages
• welfare system
• marriage market
• women’s wages
• welfare system
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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
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• 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
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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
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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
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• 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
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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
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• 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
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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
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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”
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$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
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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
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• 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)
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• 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
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• 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
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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
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• 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
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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
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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
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3.4 2.7
10
7.4
16.3
13.2
0
5
10
15
20
1950 1980 2000
% divorced, 35-59
women
men
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• 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
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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
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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
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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
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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
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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
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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