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Author: Lvovskiy, Lev
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1. Lvovskiy, Lev
Three Essays on Income Dynamics and Demographic Economics
Ph.D. Dissertation, Department of Economics, University of Iowa, 2017
Cohort(s): NLSY79, NLSY97
Publisher: ProQuest Dissertations & Theses (PQDT)
Keyword(s): Age at First Birth; Age at First Marriage; Income Dynamics/Shocks; Parents, Single

Permission to reprint the abstract has not been received from the publisher.

Chapter 2 studies the dramatic transformation that the typical American family has undergone since the 1950s. Marriage and fertility have been delayed, while single-motherhood rates have increased. The link between these facts emanates from the greater delay in marriage than that in first births. As "the Gap" between the age at first birth and the age at first marriage becomes negative for some women, out-of-wedlock first births increase. In my analyses, I focus on the increase in income inequality and the decrease in income mobility -- observed across two National Longitudinal Survey of Youth (NLSY) cohorts of women -- to account for the above facts using an equilibrium two-sided search framework in which agents make marriage and fertility choices over the life-cycle. Marriage is a commitment device for consumption-sharing, providing spouses with partial insurance against idiosyncratic earnings risk. Agents derive utility from children, but children also involve a risky commitment to future monetary and time costs. According to my model, two observed trends in the income process produce these changes in the respective timings of marriage and fertility. First, the increase in income inequality produces incentives to delay marriage. Since single women tend to face higher income risk than do married women, all else being equal, a decline in marriages when young implies delayed births, which are perceived to be risky. Second, the decrease in income mobility also delays marriage as the insurance value of marriage decreases but accelerates fertility because it becomes less risky to have a child. The model qualitatively matches the observed changes in family formation and quantitatively accounts for a significant portion of the observed changes in marriage and fertility timing between the two NLSY cohorts.
Bibliography Citation
Lvovskiy, Lev. Three Essays on Income Dynamics and Demographic Economics. Ph.D. Dissertation, Department of Economics, University of Iowa, 2017.