Working Paper: CEPR ID: DP1715
Authors: Simon Burgess; Carol Propper; Arnstein Aassve
Abstract: We investigate the importance of economic factors in young Americans? decisions to form and dissolve households. We adopt a search theoretic framework to analyse the decisions to: leave the parental home; form a marriage or partnership; and dissolve a marriage or partnership. We focus, in particular, on the impact of economic factors. Using a 14-year panel dataset of young Americans (the NLSY), we find an important role for income in all these transitions. High income in the individual?s present state reduces the chance of changing state, while high expected income in the destination state makes a move more likely.
Keywords: household formation; marriage; divorce
JEL Codes: J12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high family income (I24) | delayed departure from the parental home (J12) |
| higher own income (E25) | earlier exit from parental home (J26) |
| high own earnings (D33) | increased probability of marriage for men (J12) |
| high own earnings (D33) | decreased probability of marriage for women (J12) |
| higher earnings (J31) | negatively associated with marital dissolution for men (J12) |
| higher earnings (J31) | positively associated with marital dissolution for women (J12) |