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Macroeconomic Conditions and Marital Dissolution

Faculty Associate Melissa Kearney explores marriage markets through an R03 with North Carolina State University

In this project, Dr. Kearney and associates conduct a detailed empirical examination of the impact of macroeconomic conditions on marital dissolution, comparing and contrasting it with the impact of family-specific shocks on martial dissolution. First, empirical analysis documents the basic facts about the cyclicality of state-level divorce rates in the United States over the past four decades, using data from the Vital Statistics data series collected by the National Center for Health Statistics. Second, analysis disentangles the impact on marital dissolution of household-specific economic shocks from the effects of macro-economic factors. Data from the Panel Study of Income Dynamics (PSID) is drawn to estimate individual-level discrete time hazard models of exit from marriage into both separation and divorce. The research team incorporates into the discrete hazard variables that reflect time invariant characteristics of individuals, a flexible duration dependence term, and time-varying household-specific conditions and macroeconomic conditions for each married couple. Interactions of duration dependence with time-varying characteristics are considered. Unobserved individual heterogeneity as in Heckman and Singer (1984) is also incorporated. This project seeks to go beyond current anecdotes about the recent economic downturn and to enable researchers and policy makers to better understand the factors leading to marital instability and divorce.

Related papers

Kearney, M. and Levine, P. (2011, NBER Working Paper #17157). "Income inequality and early non-marital childbearing: An economic exploration of the culture of despair." Using individual-level data from the United States and a number of other developed countries, the role of income inequality in determining rates of early, non-marital childbearing among low socioeconomic status (SES) women was investigated. Findings suggest that low SES women are more likely to give birth at a young age and outside of marriage when they live in more unequal places, all else held constant. Inequality itself, as opposed to other correlated geographic factors, drives this relationship. Differences in the level of inequality are able to explain a sizeable share of the geographic variation in teen fertility rates both across U.S. states and across developed countries. Research proposes a model of economic “despair” that facilitates the interpretation of the results. It reinterprets the sociological and ethnographic literature that emphasizes the role of economic marginalization and hopelessness into a parsimonious framework that captures the concept of “despair” with an individual’s perception of economic success.

Dettling, L. and Kearney, M. (2011, NBER Working Paper #17485). "House prices and birth rates: The impact of the real estate market on the decision to have a baby." This paper investigates how changes in Metropolitan Statistical Area (MSA)-level housing prices affect household fertility decisions. Recognizing that housing is a major cost associated with childrearing, and assuming that children are normal goods, the authors hypothesize that an increase in real estate prices will have a negative price effect on current period fertility. This applies to both potential first-time homeowners and current homeowners who might upgrade to a bigger house with the addition of a child. On the other hand, for current homeowners, an increase in MSA-level house prices might increase available home equity, leading to a positive effect on birth rates. Short-term increases in house prices lead to a decline in births among non-owners and a net increase among owners.

See Melissa Kearney's profile