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The fabric of our society is changing. In 1980, approximately 78 percent of families with children were headed by married parents. In 2012, married parents headed only 66 percent of families with children. In a new report, Bradford Wilcox and Robert Lerman explore the role of family structure with new data and analysis, and document how this retreat from marriage is not simply a social and cultural phenomenon. It has important economic implications for, amongst others, men’s labor force participation rates, children’s high school dropout rates and teen pregnancy rates. Since these factors are highly correlated with economic opportunity and the ability to move up the income ladder, this suggests that income inequality and economic mobility across generations are critically influenced by people’s decisions and attitudes towards marriage. Understanding the role of family structure is therefore key to understanding the big economic challenges of our time.
President Obama has declared income inequality to be the “defining challenge of our time.” Last week Janet Yellen, chair of the Federal Reserve Board, highlighted how the “distribution of wealth and income in the United States has been widening” for the last several decades. Data from the Congressional Budget Office shows that over the period 1979 to 2010, incomes for the top 1 percent of the population grew by more than 200 percent, while for those in the bottom and the middle, growth averaged just above 40 percent. There are many explanations for rising income inequality. An overview of these factors in a 2008 National Bureau of Economic Research Working paper finds some role for minimum wages, declines in unionization, globalization and skill-biased technological change. However, an emphasis on family structure as a contributor to inequality has traditionally been missing.
Recently, some papers have suggested that assortative mating has a role to play in household income inequality. Empirically, it has been found that the proportion of couples who share the same level of schooling has been growing over the past few decades. This has been accompanied by a rise in household income inequality. A paper by economists at the Federal Reserve Bank found that changing family structure accounted for 52 percent of the increase in the 50-10 ratio (50th percentile to 10th percentile) and 49 percent of the increase in the 95-5 ratio. Research by Harvard economists, Chetty et al. concludes that the single strongest correlate of upward economic mobility across geographic regions of America is the fraction of children living in single-parent families.
Shift from marriage has had important consequences for family incomes
Wilcox and Lerman document how the shift away from marriage and traditional family structures has had important consequences for family incomes, and has been correlated with rising family-income inequality and declines in men’s labor force participation rates. Using data from the Current Population Survey, the authors find that between 1980 and 2012, median family income rose 30 percent for married parent families, For unmarried parents, family incomes rose only 14 percent.
These differential patterns of changes in family income have exacerbated family-income inequality. Since unmarried parent families generally expand the ranks of low-income families, while high-income, high-education adults increasingly marry partners from similar socioeconomic backgrounds, inequality trends are worsened. Comparing the 90th percentile families to the 10th percentile families in 2012, the top 10 percent had incomes that were more than 11 times higher than the bottom 10 percent. However, if we restrict the sample to married families with children, the ratio drops to nearly 7, suggesting that within married families, income inequality is less stark. The authors estimate that approximately 32 percent of the growth in family-income inequality between 1979 and 2012 is associated with changes in family structure. Other research, studying the period 1968-2000, finds that the changing family structure, accounted for 11 percent of the rise widening of the income gap between the bottom and top deciles.
Another interesting observation relates to the trends in employment participation by men. The Wilcox-Lerman study finds that for married fathers, employment and participation rates have remained consistently higher than for married men with no children and unmarried men with no children. The authors speculate that between 1980 and 2008, about 51 percent of the decline in men’s employment rates can be associated with the retreat from marriage.
Persisting across generations
These findings are striking not only because they affect current levels of income and income inequality, but because these effects persist across generations. Changes in family structure have an impact on children born and raised in these households (Becker, Murray, Thomas and Sawhill). Data from the National Longitudinal Survey of Youth 1979 and 1997 indicate that the proportion of teenagers living with their biological or adoptive parents in an intact home fell from 74 percent in 1979 to 54 percent in 1997. Data from the Census Bureau shows that child poverty rates for children in single mother households were more than five times the rate for children in married-couple households.
Aside from the effects of single motherhood on child poverty rates, the authors find that growing up with both parents is associated with a 15 percentage point lower probability of children dropping out of high school without a diploma, relative to those who were raised by a single parent. These findings are consistent with other research by Mclanahan and Sandefur that argues that children who grow up in single parent families have lower educational attainment than those who grow up with both biological parents.
Further, growing up with both parents is associated with a 12 percentage point decline in women’s unmarried parenthood. This is particularly interesting since one important reason for the rise in single motherhood is teen pregnancies. Finally, growing up with both parents also makes it more likely that both men and women will enter into marriage themselves, relative to those who grew up in single parent households.
Why family structure plays a large role
There are many reasons that family structure plays a large role in the economic success of future generations. The literature on intergenerational mobility stresses that parents may influence children’s lifetime earnings through monetary and non-monetary investments, through facilitating better access to jobs and schools, and through genetic transmission of innate ability. However, the question still remains: why are married parents different? Is it better parenting or just higher incomes and better access to resources? Is it that people who marry just have different characteristics and abilities than people who don’t, and thus are more likely to be successful role models to begin with? Unfortunately, it is hard to tease out the causal effects of these different factors.
As I have written earlier, single parenting is a cultural phenomenon that is here to stay. While we can’t explain all the reasons behind the economic impact of single parenting, what we can talk about are policies that could address some of the reasons for and consequences of single motherhood. Isabel Sawhill writes in her book, sixty percent of all births to young, single women are unplanned. Therefore, informing women about their birth control choices and making these choices affordable and accessible is key. Work by Kearney and Levine shows that non-traditional sex education can be important in helping teenagers and unmarried women understand the consequences of getting pregnant at young ages. In my study focusing on mobility, Abby McCloskey and I discuss a host of policies to help break the cycle of poverty and poor mobility for single mothers, such as expanding the Earned Income Tax Credit and improving child care subsidies and making early investments in human capital.
Single parenting as a cultural phenomenon represents not just a change in the way we view and judge ourselves as a society. Growing evidence suggests that it has implications far beyond that. The better we understand it, the closer we will be to understanding the challenging economic issues of poverty, income inequality and social mobility.
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