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Economic Incentives and Family Formation

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  • Audrey Light

    ()
    (Department of Economics, Ohio State University)

  • Yoshiaki Omori

    (Faculty of Economics, Yokohama National University)

Abstract

This study identifies the effects of economic factors that can be directly manipulated by public policy on women’s union-forming decisions. We jointly model transitions made by never-married women to cohabitation or marriage, cohabiting women to marriage or separation, and married women to divorce. We control for expected income tax burdens, maximum allowed state AFDC or TANF benefits, average state Medicaid expenditures, and parameters of state laws governing divorce and the division of property, along with a wide array of family background, personal, and environmental characteristics. We compare the estimated effects of alternative policy interventions to each other, and to the estimated effects of nonpolicy factors. In addition to focusing on the predicted effect of each factor on each individual transition (single to married, etc.), we compute their effects on the predicted probability of long-term marriage and long-term unions of any type (marriage or cohabitation). We find that each policy variable except the income tax “marriage penalty” is a potentially important determinant of long-term union formation. However, several factors that are outside the control of policy makers, such as religion, childhood household composition and the presence of children also have very large, potentially offsetting effects.

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File URL: http://www.econ.ohio-state.edu/pdf/alight/wp09-08.pdf
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Bibliographic Info

Paper provided by Ohio State University, Department of Economics in its series Working Papers with number 09-08.

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Length: 35 pages
Date of creation: Feb 2009
Date of revision:
Handle: RePEc:osu:osuewp:09-08

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References

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  1. Cornwell, Christopher & Rupert, Peter, 1997. "Unobservable Individual Effects, Marriage and the Earnings of Young Men," Economic Inquiry, Western Economic Association International, vol. 35(2), pages 285-94, April.
  2. Marianne P. Bitler & Jonah B. Gelbach & Hilary W. Hoynes & Madeline Zavodny, 2002. "The impact of welfare reform on marriage and divorce," Working Paper 2002-9, Federal Reserve Bank of Atlanta.
  3. Stéphane Mechoulan, 2006. "Divorce Laws and the Structure of the American Family," Working Papers tecipa-245, University of Toronto, Department of Economics.
  4. Saul D. Hoffman & Greg J. Duncan, 1995. "The Effect of Incomes, Wages, and AFDC Benefits on Marital Disruption," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 19-41.
  5. V. Joseph Hotz & Lixin Colin Xu & Marta Tienda & Avner Ahituv, 2002. "Are There Returns To The Wages Of Young Men From Working While In School?," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 221-236, May.
  6. Peters, H Elizabeth, 1986. "Marriage and Divorce: Informational Constraints and Private Contracting," American Economic Review, American Economic Association, vol. 76(3), pages 437-54, June.
  7. Aaron S. Yelowitz, 1998. "Will Extending Medicaid to Two-Parent Families Encourage Marriage?," Journal of Human Resources, University of Wisconsin Press, vol. 33(4), pages 833-865.
  8. Leslie S. Stratton, 2002. "Examining the Wage Differential for Married and Cohabiting Men," Economic Inquiry, Western Economic Association International, vol. 40(2), pages 199-212, April.
  9. Robert Moffitt & Robert Reville & Anne Winkler, 1998. "Beyond single mothers: Cohabitation and marriage in the AFDC program," Demography, Springer, vol. 35(3), pages 259-278, August.
  10. Robert Kaestner & Neeraj Kaushal, 2005. "Immigrant and native responses to welfare reform," Journal of Population Economics, Springer, vol. 18(1), pages 69-92, 07.
  11. Spiros Bougheas & Yannis Georgellis, 1999. "The effect of divorce costs on marriage formation and dissolution," Journal of Population Economics, Springer, vol. 12(3), pages 489-498.
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Citations

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Cited by:
  1. 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.
  2. Audrey Light & Yoshiaki Omori, 2012. "Can Long-Term Cohabiting and Marital Unions be Incentivized?," Working Papers 12-01, Ohio State University, Department of Economics.
  3. Steve Laufer & Ahu Gemici, 2011. "Marriage and Cohabitation," 2011 Meeting Papers 1152, Society for Economic Dynamics.
  4. Audrey Light & Yoshiaki Omori, 2012. "Determinants of Long-Term Unions: Who Survives the “Seven Year Itch”?," Working Papers 12-02, Ohio State University, Department of Economics.

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