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Cohabitation, child development, and college costs

Author

Listed:
  • Adamopoulou, Effrosyni
  • Hannusch, Anne
  • Kopecky, Karen A.
  • Obermeier, Tim

Abstract

Why do US college-educated couples with children marry at higher rates than those without a college degree? We argue that investing in children is more valuable for college-educated couples, who are more likely to send their children to college. Marriage, which entails lower separation risk and more equal asset division if separation does occur, provides insurance to the lower-earning spouse, which facilitates child investment. Using an OLG model of marriage, cohabitation, wealth accumulation, and educational investments where college completion is risky, we find that insurance through marriage is particularly important when investing in children is costly and college costs are high.

Suggested Citation

  • Adamopoulou, Effrosyni & Hannusch, Anne & Kopecky, Karen A. & Obermeier, Tim, 2025. "Cohabitation, child development, and college costs," ZEW Discussion Papers 25-035, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:321867
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    Keywords

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    JEL classification:

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

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