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Sources of Change in the Life-Cycle Decisions of American Men and Women: 1962-2014

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  • Eckstein, Zvi
  • Keane, Michael
  • Lifshitz, Osnat

Abstract

We study life-cycle decisions of five cohorts of American men and women born from the 1930s to the 1970s in a unified econometric framework applied to CPS data. The men and women in our model make individual decisions when single, joint decisions when married, and interact in a marriage market. Our model succeeds in explaining differences across cohorts in several key endogenous variables (i.e., education, work, marriage/divorce and fertility). We explain these changes using shifts in five exogenous factors: parental education, the distribution of potential partners, divorce laws, the wage/job offer distribution, and birth control technology. A major change between the 1935 and 1975 cohorts is that the female “marriage wage premium†rose from -10% to +7%. We find that changes in the selection of women into marriage explain 75% of this change. Married women of recent cohorts have much higher observed and unobserved skills compared both to unmarried women and the married women of past cohorts.

Suggested Citation

  • Eckstein, Zvi & Keane, Michael & Lifshitz, Osnat, 2016. "Sources of Change in the Life-Cycle Decisions of American Men and Women: 1962-2014," CEPR Discussion Papers 11393, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:11393
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    3. Andrés Erosa & Luisa Fuster & Gueorgui Kambourov & Richard Rogerson, 2022. "Hours, Occupations, and Gender Differences in Labor Market Outcomes," American Economic Journal: Macroeconomics, American Economic Association, vol. 14(3), pages 543-590, July.
    4. Margherita Borella & Mariacristina De Nardi & Fang Yang, 2023. "Are Marriage-Related Taxes and Social Security Benefits Holding Back Female Labour Supply?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(1), pages 102-131.
    5. Hassani Nezhad, Lena, 2020. "Female Employment and Childcare," IZA Discussion Papers 13839, Institute of Labor Economics (IZA).
    6. Margherita Borella & Mariacristina De Nardi & Fang Yang, 2017. "Marriage-related Policies in an Estimated Life-cycle Model of Households’ Labor Supply and Savings for Two Cohorts," Working Papers wp371, University of Michigan, Michigan Retirement Research Center.
    7. Stefania Albanesi & Maria Jose Prados, 2022. "Slowing Women’s Labor Force Participation: The Role of Income Inequality," Working Papers 2022-037, Human Capital and Economic Opportunity Working Group.
    8. Margherita Borella & Mariacristina De Nardi & Fang Yang, 2017. "The Effects of Marriage-Related Taxes and Social Security Benefits," NBER Working Papers 23972, National Bureau of Economic Research, Inc.
    9. Jeremy Greenwood & Nezih Guner & Guillaume Vandenbroucke, 2017. "Family Economics Writ Large," Working Papers wp2018_1706, CEMFI.

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