Chapter 4 Marriage & the Family Focus on 3 issues: 1) Race differences in marriage and family structure: * changes over time; * economic explanations. 2) Male marriage premium 3) Divorce: –* economic analysis; –* economic consequences.

Race Differences in Marital Status Figure 4.1: changes over time: –Big divergence by race in 1970s; –Now a 20% difference in proportion married. Figure 4.2: Race difference driven by differential growth in % never married. –% never-married age 40-44: White: 9% AA: 30% Why Care? –Key is family income and poverty. –Table 4.2: see similarity between white mother-only and AA two-parent. –% all families headed by female: White: 14% AA: 44%

Economic Explanations for Race Differences Three Explanations: –1) Changes in marriage markets –2) Changes in wage rates –3) Role of the welfare system. Probably all 3 played a role, some for all women; some for specific groups of women.

Marriage Markets William Julius Wilson: The Truly Disadvantaged and When Work Disappears. Decline in marriage: reflects declining marriage prospects of AA women (resulting from declining labor mkt position of AA men) Key: in 1970s, dramatic decline in real wages and employment rates of less skilled/less educated men; hit AA men particularly hard; this trend continues to today but biggest hit in 1970s.

Continued Result: for AA men: for those who work, lower real wages; lower employment rates. So less attractive as marriage partner since cannot support family.

MMPI Male Marriageable Pool Index: MMPI ratio of # employed men to # of women (calculated separately by race and age; also could do by education) MMPI = [# empl men / # women] Balance in marriage market: if MMPI  1, poor prospects for women At birth: MMPI = 1. But what if MMPI falls? Can show impact in marriage mkt model.

More on MMPI Reasons for  MMPI: –1)  # empl men –2)  incarceration rates –3)  mortality rates Evidence from Great Depression supports idea of men’s ability to support family as being important in marriageability. See Table 4.3: –Shows MMPI for 1960s to 2000; –MMPI shown as # empl men per 100 women. –Rate always lower for AA; AA decline over time.

MMPI and Female-Headed Families See Table 4.4: Shows changes from 1960 to 1980: –Links racial pattern in %  MMPI and %  proportion of families headed by female. –Most regions/races have  MMPI; –Always bigger  for AA than whites. –Biggest  in NE and NC (where blue- collar job loss the worst) –Big  MMPI associated with big  female headed HH. –MMPI changes are NOT only thing (see % female heads in west) – Also: other researchers note big  marriage for employed AA men too.

Importance of Women’s Wage Rates Gains from trade model: –As women’s wages rise, differences in mkt productivity between men and women falls so gains are reduced. –Data supporting this possible cause of lower marriage rates: sex wage differences less for AA than whites. S & D model: –As women’s wages rise, their S of marriage curve shifts back to left due to an  Z f reducing marriage rates (via the marriage rule). Also, as women  education, they delay fertility. So like-educated men face worse marriage prospects too.

Welfare system Key:  “production” while single. –S & D model: if Z f , then likelihood of marrying falls. History of Welfare –Social Security Act of 1935: created ADC (became AFDC); now TANF. –Beneficiaries: poor mother-only families. –In 1935: mostly widows (deemed “deserving” of support) Even today: monthly $ support quite low (range from $200 to $600 or so).

Welfare and Marriage Some scholars claim that providing welfare  marriage. –Benefits only given to single-parent families; usually with limited labor market skills. –Could have differential impact by race since AA women somewhat more likely to be low-skilled than white women. Empirical evidence weak. –Approach: Compare timing of female headship changes with policy changes: Marriage  in 1970s but welfare falling at same time. Conclusion: –Moffitt: “..none of the studies find effects sufficiently large to explain…the increase in female headship in the late 1960s and early 1970s.”

Marriage and Earnings of Men Marriage wage premium: –On average, married men earn more than unmarried men. –Hard to disentangle source of premium. –Has persisted throughout most of 20 th century and exists in other countries as well. Three theories: –1) Discrimination: Married men not more productive, just paid more because employers know they support families. –2) Marriage productivity effect (from specialization); –3) Selectivity effect: more productive men more likely to marry.

Evidence on Source of Male Marriage Wage Premium Evidence mixed: –Part due to pre-existing higher productivity and part due to effect of marriage itself. –Some evidence that premium is falling due to increased employment of wives. What about married females’ wages? –Family pay gap: Lower wages for married women. Lower wages for mothers. More detail coming later in semester.

Divorce Divorce rate started increasing in 1950s. Current divorce probabilities: –Within 5 years: 20% disrupted. –Within 10 years: 33% disrupted. –Within 20 years: 50% disrupted. Disrupted: divorce or separation Current 20 year rate is 2.5 times rate from 1950.

Economic Analysis of Divorce Marriage from gains to trade. Divorce is the opposite; will divorce if better off divorced than married. Explanations for divorce: –1) Benefits to specialization have declined as partners’ productivity equalizes. –2) Less stigma from single parenthood. –3) Causation in both directions.

Economic Consequences of Divorce In general: –Decline in financial well-being of females and increase in well-being of males. Most believable estimates: –Women: economic well-being declines 27%; –Men: economic well-being increases 10%. –Economic well-being: (Family income) / (Family needs) where family needs rises with family size. –Remarriage is common.