Marriage, Childbearing and Divorce
The effects of Government policy

Social and economic policies can have a variety of effects on family and household formation and dissolution. Marriage, fertility, divorce and other aspects of demographic behaviour are often unintentionally affected by government policy actions. Indeed, policy-makers often do not even consider the possibility that their actions will have demographic effects. In Discussion Paper No. 116, Research Fellow John Ermisch analyses the demographic implications of social policies in Great Britain in the 1970s, in the areas of equal pay and equal opportunities, housing, higher education, economic stabilization, social security, and family law reform.

The Equal Pay Act of 1970 specified that women should be paid the same as men for doing the same job. Largely as a consequence of this Act, from 1970 to 1977 female earnings rose from 63% to 74% of men's. Econometric analysis indicates that this increase in relative earnings encouraged a shift to later childbearing, by raising the cost of children, as measured by the earnings forgone by leaving paid employment to start a family (see Discussion Paper No. 37, reported in Bulletin No. 7). This effect on the timing of childbearing made an important contribution to the large fluctuation in births during the 1970s, but it had little apparent effect on family size. But later childbearing is strongly associated with later marriage. Ermisch discusses econometric estimates which indicate that the Equal Pay Act encouraged later marriage and probably increased the incidence of divorce. It is unclear, however, whether the link between the legislation and divorce rates operated through higher relative pay for women or through the longer period they spent in employment. From the woman's point of view, higher relative pay reduces the incentive to accept the traditional marital division of labour between spouses and the associated economic dependence, and it helps women to support themselves and any children outside of marriage. If women are less financially dependent on their husbands, marriages that are strained may be more likely to break down. But it is more difficult to assess the overall effect of equal pay policies on the incidence of divorce. These policies also influence the timing of marriage and of motherhood, and the amount of time spent in paid employment, which themselves affect the risk of divorce, Ermisch notes.

Government intervention in the housing market takes many forms, of which two have particularly important demographical effects. First, policies designed to reduce the cost of housing to consumers; these include rent control, rent allowance schemes, and tax advantages to owner-occupiers. Second, governments provide housing directly, usually at low rents (e.g. local authority housing in the United Kingdom). Policies which reduce the cost of housing encourage household formation, most significantly among young people, previously married people and one-parent families. Ermisch calculates that a policy which reduced the cost of housing to consumers by 10% would tend to increase the total number of households by about 0.2%. It is more difficult to judge the extent to which the direct provision of housing by local authorities increases household formation, because such building also has an impact on the private sector housing market. Ermisch finds that in Britain, local authority housebuilding appears to have increased the proportion of elderly people heading their own household, and that the priority allocation system in local authority housing may have encouraged early childbearing by couples wishing to get a home of their own, or a better home.

Comparisons with other European countries suggest that the flexibility of the rental housing market affects the pattern of young people leaving their parents' homes. The formation of consensual unions and of non-family households (i.e. those not containing parents or a conjugal partner) by young people appears to be more common in countries with housing policies which encourage more flexible provision of rental housing. The increased levels of youth unemployment and policies to expand higher education also appear to have influenced the patterns of household formation by young people and the timing of their departure from their parents' homes, particularly because the behaviour of students and of non-students in these areas tend to differ.

Economic stabilization policies are designed to influence the rates of inflation and unemployment, which in turn have an impact on family formation and dissolution. Econometric analysis of British data indicates that higher inflation induces later childbearing. Higher inflation appears to encourage increased saving in order to maintain the real value of monetary assets, and higher savings targets and childbearing conflict. Ermisch also reports research which suggests that higher unemployment tends to bring forward the age at which women have their first child. The net effect of an anti-inflation policy that raised unemployment while lowering inflation would be earlier childbearing.

This is evidence that higher unemployment increases the stresses placed on many marriages, and thereby tends to increase the divorce rate. Social security policies can alleviate some of the adverse effects of macroeconomic policies, but their demographic impact often depends on the particular way that they are put into practice. An example of the potency of such policies is provided by the Negative Income Tax Experiment (NITE) in the United States, Ermisch argues. In this experiment randomly chosen families received cash payments (in the form of tax credits) in place of the usual methods of assistance. Families receiving assistance under the NITE experienced rates of marital break-up that were 50% higher than the 'control' group of families with similar characteristics eligible for the prevailing set of income maintenance programmes. This suggests that the structure of social security programmes and the level of benefits provided can have substantial effects on marital breakdown and on the formation of one-parent families and households.

Finally, Ermisch considers the demographic effects of two important pieces of family law enacted in Britain in the late 1960s. The 1969 Family Law Reform Act reduced the age of majority from 21 to 18, causing a movement toward earlier first marriages. The Divorce Reform Act of 1969 amended the grounds for divorce, and it appears to have played some role in the accelerating rise in divorce rates during the 1970s.

Britain therefore provides an interesting example of the demographic impacts of government policy, according to Ermisch. Many policy changes in the past 15 years have had important and often unintended effects on marriage, fertility, divorce, and household formation. During the 1970s, equal pay policies that altered the timing of marriage and childbearing may have affected the likelihood of divorce. Monetary and fiscal policies designed to reduce inflation also increased unemployment, and lower inflation and higher unemployment have tended to alter the timing of childbearing and the likelihood of divorce. Housing policies have continued to influence the timing of marriage and childbearing and the pattern of household formation by groups such as the young and the old.

John Ermisch will discuss economic causes and consequences of divorce at a lunchtime meeting on January 23, one of a series to be held jointly by CEPR and the British Society for Population Studies.


Impacts of Policy Actions on the Family and the Household
John Ermisch

Discussion Paper No. 116, July 1986 (HR)