Can Long-Term Cohabiting and Marital Unions be Incentivized?

In this study, we ask whether economic factors that can be directly manipulated by public policy have important effects on the probability that women experience long-lasting unions. Using data from the 1979 National Longitudinal Survey of Youth, we estimate a five-stage sequential choice model for women's transitions between single with no prior unions, cohabiting, first-married, re-single (divorced or separated), and remarried. We control for expected income tax burdens, Aid to Families with Dependent Children (AFDC) or Temporary Assistance for Needy Families (TANF) benefits, Medicaid expenditures, and parameters of state divorce laws, along with an array of demographic, family background, and market factors. We simulate women's sequences of transitions from age 18 to 48 and use the simulated outcomes to predict the probability that a woman with given characteristics (a) forms a first union by age 24 and maintains the union for at least 12 years, and (b) forms a second union by age 36 and maintains it for at least 12 years. While non-policy factors such as race and schooling prove to have important effects on the predicted probabilities of long-term unions, the policy factors have small and/or imprecisely estimated effects; in short, we fail to identify policy mechanisms that could potentially be used to incentivize long-term unions.