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

Author(s): Zvi Eckstein, Michael Keane and Osnat Lifshitz

Publication Date: July 2016

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Programme Area(s): Labour Economics

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.

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Bibliographic Reference

Eckstein, Z, Keane, M and Lifshitz, O. 2016. 'Sources of Change in the Life-Cycle Decisions of American Men and Women: 1962-2014'. London, Centre for Economic Policy Research. http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=11393