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Economic Incentives and Family Formation

Author

Listed:
  • 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.

Suggested Citation

  • Audrey Light & Yoshiaki Omori, 2009. "Economic Incentives and Family Formation," Working Papers 09-08, Ohio State University, Department of Economics.
  • Handle: RePEc:osu:osuewp:09-08
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    File URL: http://www.econ.ohio-state.edu/pdf/alight/wp09-08.pdf
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    References listed on IDEAS

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    1. Robert Moffitt & Robert Reville & Anne Winkler, 1998. "Beyond single mothers: Cohabitation and marriage in the AFDC program," Demography, Springer;Population Association of America (PAA), vol. 35(3), pages 259-278, August.
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    4. 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.
    5. Robert Kaestner & Neeraj Kaushal, 2005. "Immigrant and native responses to welfare reform," Journal of Population Economics, Springer;European Society for Population Economics, vol. 18(1), pages 69-92, July.
    6. Hector Chade & Gustavo Ventura, 2005. "Income Taxation and Marital Decisions," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 8(3), pages 565-599, Juky.
    7. 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.
    8. 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.
    9. Marianne Bitler & Jonah Gelbach & Hilary Hoynes & Madeline Zavodny, 2004. "The impact of welfare reform on marriage and divorce," Demography, Springer;Population Association of America (PAA), vol. 41(2), pages 213-236, May.
    10. Spiros Bougheas & Yannis Georgellis, 1999. "The effect of divorce costs on marriage formation and dissolution," Journal of Population Economics, Springer;European Society for Population Economics, vol. 12(3), pages 489-498.
    11. Stéphane Mechoulan, 2006. "Divorce Laws and the Structure of the American Family," The Journal of Legal Studies, University of Chicago Press, vol. 35(1), pages 143-174, January.
    12. Daniel Lichter & Zhenchao Qian & Leanna Mellott, 2006. "Marriage or dissolution? Union transitions among poor cohabiting women," Demography, Springer;Population Association of America (PAA), vol. 43(2), pages 223-240, May.
    13. Feenberg, Daniel R. & Rosen, Harvey S., 1995. "Recent Developments in the Marriage Tax," National Tax Journal, National Tax Association;National Tax Journal, vol. 48(1), pages 91-101, March.
    14. 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.
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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, January.
    2. Audrey Light & Yoshiaki Omori, 2013. "Determinants of Long-Term Unions: Who Survives the “Seven Year Itch”?," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 32(6), pages 851-891, December.
    3. Steve Laufer & Ahu Gemici, 2009. "Marriage and Cohabitation," 2009 Meeting Papers 1191, Society for Economic Dynamics.
    4. Audrey Light & Yoshiaki Omori, 2012. "Can Long-Term Cohabiting and Marital Unions be Incentivized?," Working Papers 12-01, Ohio State University, Department of Economics.

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