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Cohabitation, Child Development, and College Costs

Author

Listed:
  • Effrosyni Adamopoulou

  • Anne Hannusch

  • Karen A. Kopecky
  • Tim Obermeier

Abstract

US college-educated couples with children marry at higher rates than those without a college degree. We argue that marriage, which entails lower separation risk and more equitable asset division if separation occurs, provides insurance to the lower-earning spouse, facilitating child investment. Investing in children is more valuable for college-educated couples, who are more likely to send their children to college. Using an OLG model of marriage, cohabitation, wealth accumulation, and educational investments where college is costly and completion is risky, we find that high college costs reduce incentives to marry among couples without a college degree. These differences in union choice by education heighten differences in children’s educational attainment and reduce intergenerational mobility.

Suggested Citation

  • Effrosyni Adamopoulou & Anne Hannusch & Karen A. Kopecky & Tim Obermeier, 2025. "Cohabitation, Child Development, and College Costs," Opportunity and Inclusive Growth Institute Working Papers 122, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmoi:102177
    DOI: 10.21034/iwp.122
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    Keywords

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    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • D15 - Microeconomics - - Household Behavior - - - Intertemporal Household Choice; Life Cycle Models and Saving
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure

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