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Economic Incentives and Family Formation

37 Pages Posted: 6 May 2009  

Audrey Light

Ohio State University (OSU) - Economics

Yoshiaki Omori

Toyama University - Faculty of Economics

Date Written: August 2008


This study identifies the effects of economic factors that can be directly manipulated by public policy on women's union-forming decisions. We jointly model transitions made by never-married women to cohabitation or marriage, cohabiting women to marriage or separation, and married women to divorce. We control for expected income tax burdens, maximum allowed state AFDC or TANF benefits, average state Medicaid expenditures, and parameters of state laws governing divorce and the division of property, along with a wide array of family background, personal, and environmental characteristics. We compare the estimated effects of alternative policy interventions to each other, and to the estimated effects of nonpolicy factors. In addition to focusing on the predicted effect of each factor on each individual transition (single to married, etc.), we compute their effects on the predicted probability of long-term marriage and long-term unions of any type (marriage or cohabitation). We find that each policy variable except the income tax "marriage penalty" is a potentially important determinant of long-term union formation. However, several factors that are outside the control of policy makers, such as religion, childhood household composition and the presence of children also have very large, potentially offsetting effects.

Suggested Citation

Light, Audrey and Omori, Yoshiaki, Economic Incentives and Family Formation (August 2008). Available at SSRN: or

Audrey Light (Contact Author)

Ohio State University (OSU) - Economics ( email )

410 Arps Hall
1945 N. High St.
Columbus, OH 43210-1172
United States
614-292-0493 (Phone)

Yoshiaki Omori

Toyama University - Faculty of Economics ( email )

3190, Gofuku
Toyama, 930-8555
81-764-45-6425 (Phone)
81-764-45-6419 (Fax)

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