Sources of Change in the Life-Cycle Decisions of American Men and Women: 1962-2014

61 Pages Posted: 18 Jul 2016

See all articles by Zvi Eckstein

Zvi Eckstein

The Interdisciplinary Center (IDC); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Michael P. Keane

University of New South Wales

Osnat Lifshitz

Academic College of Tel-Aviv Yafo

Date Written: July 2016

Abstract

We study life-cycle decisions of five cohorts of American men and women born from the 1930s to the 1970s in a unified econometric framework applied to CPS data. The men and women in our model make individual decisions when single, joint decisions when married, and interact in a marriage market. Our model succeeds in explaining differences across cohorts in several key endogenous variables (i.e., education, work, marriage/divorce and fertility). We explain these changes using shifts in five exogenous factors: parental education, the distribution of potential partners, divorce laws, the wage/job offer distribution, and birth control technology. A major change between the 1935 and 1975 cohorts is that the female "marriage wage premium" rose from -10% to 7%. We find that changes in the selection of women into marriage explain 75% of this change. Married women of recent cohorts have much higher observed and unobserved skills compared both to unmarried women and the married women of past cohorts.

Suggested Citation

Eckstein, Zvi and Keane, Michael P. and Lifshitz, Osnat, Sources of Change in the Life-Cycle Decisions of American Men and Women: 1962-2014 (July 2016). CEPR Discussion Paper No. DP11393, Available at SSRN: https://ssrn.com/abstract=2811089

Zvi Eckstein (Contact Author)

The Interdisciplinary Center (IDC) ( email )

P. O. Box 167
Herzliya, 69978, PA Pennsylvania 46150
United States
+972 9 9602706 (Phone)
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HOME PAGE: http://www1.idc.ac.il/Faculty/Eckstein/index.html

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Michael P. Keane

University of New South Wales ( email )

Sydney, NSW
Australia

Osnat Lifshitz

Academic College of Tel-Aviv Yafo ( email )

Israel

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