The Family Formation Response to a Localized Economic Shock: Evidence from the Fracking Boom

Abstract

There has been a well-documented “retreat from marriage” among less educated individuals in the U.S. and non-marital childbearing has become the norm among young mothers and mothers with low levels of education. One hypothesis is that the declining economic position of men in these populations is at least partially responsible for these trends. That leads to the reverse hypothesis that an increase in potential earnings of less-educated men would correspondingly lead to an increase in marriage and a reduction in non-marital births. To investigate this possibility, we empirically exploit the positive economic shock associated with localized “fracking booms” throughout the U.S. in recent decades. We confirm that these localized fracking booms led to increased wages for non-college-educated men. A reduced form analysis reveals that in response to local-area fracking shocks, the non-marital share of births falls. But, both marital and non-marital births increase and there is no evidence of an increase in marriage rates. The pattern of results is consistent with positive income effects on births, but no associated increase in marriage. We compare our findings to the response to the Appalachian coal boom experience of the 1980s, when it appears that marital births and marriage rates increased, but non-marital births did not. This contrast potentially suggests important interactions between economic forces and social context.

Keywords: Non-Marital Birth, Fertility, Family Formation, Fracking

JEL Classification: J13, J12, Q33