The Role of Labor and Marriage Markets, Preference Heterogeneity, and the Welfare System in the Life Cycle Decisions of Black, Hispanic, and White Women

42 Pages Posted: 10 Aug 2010

See all articles by Michael P. Keane

Michael P. Keane

University of New South Wales

Kenneth I. Wolpin

University of Pennsylvania

Abstract

Using data from the NLSY79, we structurally estimate a dynamic model of the life cycle decisions of young women. The women make sequential joint decisions about school attendance, work, marriage, fertility, and welfare participation. We use the model to perform counterfactual simulations designed to shed light on three questions: (1) How much of observed minority–majority differences in behavior can be attributed to differences in labor market opportunities, marriage market opportunities, and preference heterogeneity? (2) How does the welfare system interact with these factors to augment those differences? (3) How can new cohorts that grow up under the new welfare system (Temporary Aid for Needy Families) be expected to behave compared to older cohorts?

Suggested Citation

Keane, Michael P. and Wolpin, Kenneth I., The Role of Labor and Marriage Markets, Preference Heterogeneity, and the Welfare System in the Life Cycle Decisions of Black, Hispanic, and White Women. International Economic Review, Vol. 51, No. 3, pp. 851-892, August 2010, Available at SSRN: https://ssrn.com/abstract=1654641 or http://dx.doi.org/10.1111/j.1468-2354.2010.00604.x

Michael P. Keane (Contact Author)

University of New South Wales ( email )

Sydney, NSW
Australia

Kenneth I. Wolpin

University of Pennsylvania ( email )

Philadelphia, PA 19104
United States

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