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

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 in education, work, marriage/divorce and fertility across the five cohorts using shifts in five exogenous factors: parental education, the distribution of potential partners, divorce laws, the wage/job offer distribution, and birth control technology. For example, one major change between the 1935 and 1975 cohorts was an increase in the employment rate of married women aged 25 to 34 from 29% to 60%. Our model attributes almost 2/3 of this increase to improved wage/job offer distributions for women, while 1/3 is accounted for by improved birth control technology. Another major change was the increase in women’s college graduation rate from 6% to 37%. Our model attributes roughly 40% of this change to higher mother’s education, 33% to lower divorce costs, 20% to improved wage/job offers and 7% to changes in the marriage offer distribution. Oral contraception explains most of the drop in completed fertility.