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The Role Of Labor And Marriage Markets, Preference Heterogeneity, And The Welfare System In The Life Cycle Decisions Of Black, Hispanic, And White Women

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  • Michael P. Keane
  • Kenneth I. Wolpin

Abstract

Using data from the NLSY79, we structurally estimate a dynamic model of the life cycle decisions of young women. The women make sequential joint decisions about school attendance, work, marriage, fertility, and welfare participation. We use the model to perform counterfactual simulations designed to shed light on three questions: (1) How much of observed minority-majority differences in behavior can be attributed to differences in labor market opportunities, marriage market opportunities, and preference heterogeneity? (2) How does the welfare system interact with these factors to augment those differences? (3) How can new cohorts that grow up under the new welfare system (Temporary Aid for Needy Families) be expected to behave compared to older cohorts? Copyright (2010) by the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.

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Bibliographic Info

Article provided by Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association in its journal International Economic Review.

Volume (Year): 51 (2010)
Issue (Month): 3 (08)
Pages: 851-892

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Handle: RePEc:ier:iecrev:v:51:y:2010:i:3:p:851-892

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References

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  1. Mark R. Rosenzweig, 1999. "Welfare, Marital Prospects, and Nonmarital Childbearing," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages S3-S32, December.
  2. M. Keane & R. Moffitt, . "A structural model of multiple welfare program participation and labor supply," Institute for Research on Poverty Discussion Papers 1080-96, University of Wisconsin Institute for Research on Poverty.
  3. Hilary Hoynes, 1993. "Welfare Transfers in Two-Parent Families: Labor Supply and Welfare Participation Under AFDC-UP," NBER Working Papers 4407, National Bureau of Economic Research, Inc.
  4. Hanming Fang & Dan Silverman, 2007. "Time-Inconsistency and Welfare Program Participation: Evidence from the NLSY," NBER Working Papers 13375, National Bureau of Economic Research, Inc.
  5. Hanming Fang & Michael P. Keane, 2004. "Assessing the Impact of Welfare Reform on Single Mothers," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 35(1), pages 1-116.
  6. Shannon Seitz, 2009. "Accounting for Racial Differences in Marriage and Employment," Journal of Labor Economics, University of Chicago Press, vol. 27(3), pages 385-437, 07.
  7. Christopher A. Swann, 2004. "Welfare Reform when Recipients are Forward-Looking," Department of Economics Working Papers 04-04, Stony Brook University, Department of Economics.
  8. Robert G. Wood, 1995. "Marriage Rates and Marriageable Men: A Test of the Wilson Hypothesis," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 163-193.
  9. Sauer, Robert & Keane, Michael P., 2007. "A computationally practical simulation estimation algorithm for dynamic panel data models with unobserved endogenous state variables," Discussion Paper Series In Economics And Econometrics 0705, Economics Division, School of Social Sciences, University of Southampton.
  10. Keane, Michael P & Wolpin, Kenneth I, 1994. "The Solution and Estimation of Discrete Choice Dynamic Programming Models by Simulation and Interpolation: Monte Carlo Evidence," The Review of Economics and Statistics, MIT Press, vol. 76(4), pages 648-72, November.
  11. Heckman, James J & Macurdy, Thomas E, 1980. "A Life Cycle Model of Female Labour Supply," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 47-74, January.
  12. van der Klaauw, Wilbert, 1996. "Female Labour Supply and Marital Status Decisions: A Life-Cycle Model," Review of Economic Studies, Wiley Blackwell, vol. 63(2), pages 199-235, April.
  13. Tülin Erdem, 1996. "A Dynamic Analysis of Market Structure Based on Panel Data," Marketing Science, INFORMS, vol. 15(4), pages 359-378.
  14. Moffitt, Robert, 1983. "An Economic Model of Welfare Stigma," American Economic Review, American Economic Association, vol. 73(5), pages 1023-35, December.
  15. Daniel McFadden, 1987. "A Method of Simulated Moments for Estimation of Discrete Response Models Without Numerical Integration," Working papers 464, Massachusetts Institute of Technology (MIT), Department of Economics.
  16. Michael J. Brien, 1997. "Racial Differences in Marriage and the Role of Marriage Markets," Journal of Human Resources, University of Wisconsin Press, vol. 32(4), pages 741-778.
  17. Miller, Robert A. & Sanders, Seth G., 1997. "Human capital development and welfare participation," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 46(1), pages 1-43, June.
  18. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier.
  19. Keane, Michael, 1993. "Simulation estimation for panel data models with limited dependent variables," MPRA Paper 53029, University Library of Munich, Germany.
  20. Wolpin, Kenneth I, 1992. "The Determinants of Black-White Differences in Early Employment Careers: Search, Layoffs, Quits, and Endogenous Wage Growth," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 535-60, June.
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Citations

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Cited by:
  1. Larry E. Jones & Alice Schoonbroodt & Michèle Tertilt, 2010. "Fertility Theories: Can They Explain the Negative Fertility-Income Relationship?," NBER Chapters, in: Demography and the Economy, pages 43-100 National Bureau of Economic Research, Inc.
  2. Zvi Eckstein & Osnat Lifshitz, 2011. "Dynamic Female Labor Supply," Econometrica, Econometric Society, vol. 79(6), pages 1675-1726, November.
  3. Fernández, Raquel & Wong, Joyce Cheng, 2011. "The Disappearing Gender Gap: The Impact of Divorce, Wages, and Preferences on Education Choices and Women's Work," CEPR Discussion Papers 8627, C.E.P.R. Discussion Papers.
  4. DAVID M. BLAU & WILBERT van der KLAAUW, 2013. "What Determines Family Structure?," Economic Inquiry, Western Economic Association International, vol. 51(1), pages 579-604, 01.
  5. Joyce Wong & Raquel Fernández, 2012. "The Disappearing Gender Gap: The impact of divorce, wages, and preferences on education and women's work," 2012 Meeting Papers 176, Society for Economic Dynamics.
  6. Keane, Michael P. & Sauer, Robert M., 2006. "Classification Error in Dynamic Discrete Choice Models: Implications for Female Labor Supply Behavior," IZA Discussion Papers 2332, Institute for the Study of Labor (IZA).
  7. Juan Pantano & Qi Li, 2013. "The Demographic Consequences of Gender Selection Technology," 2013 Meeting Papers 1161, Society for Economic Dynamics.
  8. Michael Keane, 2011. "Income Taxation in a Life Cycle Model with Human Capital," Working Papers 201117, ARC Centre of Excellence in Population Ageing Research (CEPAR), Australian School of Business, University of New South Wales.
  9. Apps, Patricia & Mendolia, Silvia & Walker, Ian, 2012. "The Impact of Pre-school on Adolescents' Outcomes: Evidence from a Recent English Cohort," IZA Discussion Papers 6971, Institute for the Study of Labor (IZA).
  10. Slonimczyk, Fabian & Yurko, Anna, 2013. "Assessing the Impact of the Maternity Capital Policy in Russia Using a Dynamic Model of Fertility and Employment," IZA Discussion Papers 7705, Institute for the Study of Labor (IZA).
  11. Keane, Michael P. & Todd, Petra E. & Wolpin, Kenneth I., 2011. "The Structural Estimation of Behavioral Models: Discrete Choice Dynamic Programming Methods and Applications," Handbook of Labor Economics, Elsevier.
  12. Clement Joubert & Sekyu Choi, 2012. "The value of remarriage," 2012 Meeting Papers 1111, Society for Economic Dynamics.
  13. Raquel Fernández & Joyce Cheng Wong, 2011. "The Disappearing Gender Gap: The Impact of Divorce, Wages, and Preferences on Education Choices and Women's Work," NBER Working Papers 17508, National Bureau of Economic Research, Inc.
  14. Fernández, Raquel & Wong, Joyce Cheng, 2011. "The Disappearing Gender Gap: The Impact of Divorce, Wages, and Preferences on Education Choices and Women's Work," IZA Discussion Papers 6046, Institute for the Study of Labor (IZA).
  15. José Canals-Cerdá & Shiferaw Gurmu, 2008. "Premarital Birth Among Young Hispanic Women: Evidence from Semiparametric Competing Risks Analysis," Atlantic Economic Journal, International Atlantic Economic Society, vol. 36(4), pages 421-440, December.
  16. M. P. Keane & R. M. Sauer, 2008. "Implications of Classification Error for the Dynamics of Female Labor Supply," CHILD Working Papers wp13_08, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.

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