MARRIAGE AND THE FAMILLY: Economic Issues and Application Chapter 4

RACE AND FAMILY STRUCTURE Does Race Impact Households forming a Family The Answer is YES It can be seen in your text, Table 4.1

RACE DIFFERENCES IN MARITAL AND FAMILY STATUS, 2002 WHITE (%)BLACK (%) AMONG ALL WOMEN, AGE 15+ MARRIED, SPOUSE PRESENT NEVER MARRIED AMONG ALL WOMEN. AGE MARRIED, SPOUSE PRESENT NEVER MARRIED AMONG ALL FAMILIES WITH CHILDREN < AGE 18 %TWO PARENTS %FEMALE HOUSE HOLDER AMONG ALL CHILDREN %RESIDING WITH TWO PARENTS %RESIDING WITH MOTHER ONLY

RACE DIFFERENCES IN MARITAL AND FAMILY STATUS This difference leads to two questions: When did these differences develop? Why did they develop? It is clear from the graph in your text Fig 4.1 that there has been a big difference in the percentage of married women since 1950

PROPORTION OF WOMEN AGE 15 AND OLDER, MARRIED, BY RACE, % 70 % 60 % 50 % 40 % 30 % 20 % WHITE BLACK

RACE DIFFERENCES IN MARITAL AND FAMILY STATUS Clearly in the mid 60s thru perhaps the 1980s So then the question is WHY? One possibility is the Rate of Divorce The graph 4.2 in your text

CHANGES IN THE MARITAL STATUS OF BLACK WOMEN, % 50 % 40 % 30 % 20 % 10 % 0 % NEVER MARRIED DIVORCED

RACE DIFFERENCES IN MARITAL AND FAMILY STATUS Clearly it appears the NEVER MARRIED accounts for more than the Divorced category Furthermore Female Householders Increased. Or in other words, number of children raised in two parent household decrease during this same period

CHILDREN UNDER AGE 18 IN TWO-PARENT FAMILIES BY RACE, % 80 % 70 % 60 % 50 % 40 % 30 % WHITE BLACK

Is family structure an Economic Issue Family structure is currently a very heated “social” issue It has some economic implications in that some structures are likely to have a given economic status Again from your text table 4.2

FAMILY INCOME AND POVERTY STATUS OF INDIVIDUALS BY FAMILY STRUCTURE AND RACE, 2000 WHITEBLACK MEDIAN FAMILY INCOME TWO-PARENT FAMILY MOTHER-ONLY FAMILY AS PERCENT OF TWO-PARENT $59,953 $28, % $50,741 $20, % POVERTY RATE TWO-PARENT FAMILY MOTHER-ONLY FAMILY 7.7% 22.1% 20.8% 38.7%

Economic Explanations for the Divergence in the Marital Status of White and Blacks Marriage Market Women’s Wage Rates The Welfare System

Marriage Market In Chapter 3, we saw that there is a surplus of White Males (shortage of white females) and A surplus of Black and Hispanic females (shortage of Black and Hispanic males) That comparison however, may not be specific enough to determine the marriage market

Marriage Market Mid 1980s sociologist William Julius Wilson wrote two books that become standard in the literature: The Truly Disadvantage and When Work Disappears.\ In The Truly Disadvantage he argues that low skilled jobs decreased and consequently the job prospects of many Black Males decreased Consequently, the marriage prospects of Black females decrease as well

Marriage Market William Julius Wilson developed the Male Marriageable Pool Index

MMPIs BY AGE, RACE, AND YEAR AGE BLACK WHITE AGE BLACK WHITE

THE MMPI AND THE PROPORTION OF FAMILIES HEADED BY WOMEN, , BY RACE REGION AND RACIAL GROUP PERCENTAGE POINT CHANGE IN MMPI ( ) PERCENTAGE POINT CHANGE IN PROPORTION OF FAMILIES HEADED BY WOMEN NORTHEAST BLACK WHITE NORTH CENTRAL BLACK WHITE SOUTH BLACK WHITE WEST BLACK WHITE

Women’s Wage Rates The impact can be: The closer female/male wage ratio the less the benefits for the female (and even the male) from marriage Higher the female wages the higher the opportunity cost of marriage An example of this can be found in the data from Mexico presented below

Women Marital Status In Mexico

Women Marital Status In the State of Baja California

Women Marital Status In the State of San Luis Potosi

Not Married Women

Married by Type of Marriage

Non-Married Status (other than never married)

The Welfare System Welfare system in the US has its broad origins in the Social Security Act of 1935 At the time, a program labeled ADC (Aid to Dependent Children) The Program was later changed to AFDC (Aid to Families with Dependent Children)

The Welfare System It was not until the late 1950s that the Federal Government started to reimburse states for participating in AFDC In the 1960s as part of the War on Poverty the program was expanded and increased the number of individuals eligible

The NEW Welfare In 1994, in part due to the public sentiment that was voiced by the Clinton Administration TANF (Temporary Assistance Needy Families) substitute AFDC

PROPORTION OF WOMEN AGE 15 AND OLDER, MARRIED, BY RACE, % 70 % 60 % 50 % 40 % 30 % 20 % WHITE BLACK Note the Increase

Marriage and the Earnings of Men Married men generally earn more income that single man Even after taking many factors that would be impacting the difference So it has received the name of: The Male Marriage Premium

Marriage and the Earnings of Men There may be several reason: The MP L may be the same but employers pay married man more. This may be possible but not likely in a competitive market Two other reasons are based on the assumption that MP L (MARRIED) > MP L (SINGLE)

Marriage and the Earnings of Men MARRIAGE PRODUCTIVITY EFFECT. Here the economies of scale at the household level allows men to become more specialized at the work palce MARRIAGE SELECTIVITY EFFECT. Here the assumption is that holding all other things constant, men that married tend to be more industrious, more responsible, more courteous, etx

Marriage and the Earnings of Men Korenman and Neumark found that about the The Male Marriage Premium was about 11% With about 6% of the 11% coming from the MARRIAGE PRODUCTIVITY EFFECT and the remained from the MARRIAGE SELECTIVITY EFFECT

Divorce There can be gains and losses In an economic sense, divorce is the decision of the opportunity cost between remaining married and become single again Again from your Text Table 4.5

ILLUSTRATIVE ANALYSIS OF “GAINS TO DIVORCE” CASE 1 CASE 2CASE 3 CURRENT MARITAL OUTPUT M = 6 F = 6 M = 6 F = 6 M = 6 F = 6 EXPECTED SINGLE OUTPUT M = 3 F = 7 M = 7 F = 7 M = 5 F = 8 ANALYSIS F BETTER OFF SINGLE, M WORSE OFF. TOTAL OUTPUT LARGER IF MARRIED THAN SINGLE (12 VS 10) BOTH BETTER OFF SINGLE. TOTAL OUTPUT LARGER IF SINGLE THAN MARRIED (12 VS 14) F BETTER OFF SINGLE, M WORSE OFF. TOTAL OUTPUT LARGER IF SINGLE THAN MARRIED (13 VS 12) EXPECTED RESULT M COULD GIVE 2 UNITS OF MARITAL OUTPUT TO F, LEAVING HER WITH 8 AND HIM WITH 4. BOTH ARE NOW BETTER OFF MARRIED THAN SINGLE. THIS MARRIGE CAN BE SAVE! NO REARRENGEMENT OF OUTPUT WITHIN THE MARRIAGE CAN MAKE ONE PARTY BETTER OFF THAN IF SINGLE WITHOUT MAKING OTHER WORSE OFF. THIS MARRIAGE SHOULD AND PROBABLY WILL END. TO MAKEF BETTER OFF IN MARRIAGE, M MUST GIVE MORE THAN 2 UNITS OF MARITAL OUTPUT TO F, LEAVING HIM WITH FEWER THAN 4 UNITS, F IS NOW BETTER OFF, BUT M IS WORSE OFF. THIS MARRIAGE SHOULD AND PROBABLY WILL END.

UNCERTANTY, THE GAINS TO MARRIAGE, AND DIVORCE % 0 GA Gains to Marriage (A) % 0 GO Gains to Marriage (B)