Family Values and the Value of Families: Theory and Evidence of Marriage as an Institution

Abstract:     
Children take considerable time and effort to "produce," and their production is overseen by their families. As a consequence, family type may have a significant effect on child outcomes. One would expect that the relative disadvantages of having unmarried parents would have diminished over the past few decades. The expansion of social welfare programs and greater social acceptance of alternate lifestyles should have reduced the burdens faced by non-married couple families; improved control over fertility should have reduced the likelihood of children being born into disadvantaged environments. I present evidence that the opposite is true: the average difference between children whose parents are married and those whose parents are not has increased. This increase is consistent with an asymmetric information model of marriage (Murphy 1999). The apparent increase in the penalty faced by children growing up outside of married couple families reflects a composition effect: the pool of surviving marriages has changed. Expanded AFDC, lower divorce costs, and smaller penalties associated with out-of-wedlock births allow women to more easily avoid or escape bad marriages; as a consequence, surviving marriages are "better" on average.

Number of Pages in PDF File: 35

JEL Classification: J12, J13

working papers series