Cohabitation, Marriage, and Fertility: Divergent Patterns for Different Education Groups

Helu Jiang
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Helu Jiang: Washington University in St. Louis

No 1268, 2018 Meeting Papers from Society for Economic Dynamics

Abstract: The U.S. has been experiencing a long-term decline in the rates of marriage and fertility and a steady rise in cohabitation. We use data from the the Current Population Survey to show these patterns vary across education groups. We argue such divergence is related to the changes in sources of gains from marriage. The traditional gender specialization in market work versus home production has weakened as the gender wage gap narrows and both educational attainment and labor force participation for women rise. The primary source of the gains of marriage shifts to investment in children since marriage provides strong commitment mechanism that allows parents to adopt a high-investment strategy. These changes imply that cohabitation becomes a desirable living arrangement choice for some people, in which they gain utility from living with a partner enjoying public goods but face less commitment. On the other hand, a highly educated woman, who faces a higher opportunity cost of raising a child due to higher wage compensation, also experiences a higher return of investment in children. Thus it’s crucial to examine the marital choice and fertility decision jointly. Using a two-period over-lapping-generation model, we theorize the influence of changes in labor market on females’ martial choices and fertility decisions by examining the trade-off between working, producing household service, and investing in children for different skill groups. Calibrating the simplified benchmark model using targets from period 1995 to 2008, we are able to explain over 65% of the differential fertility choices for females with different education background and marital status.

Date: 2018
New Economics Papers: this item is included in nep-dge
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