Wednesday, October 29, 2014

If You Decide to Have Children, Get Married First

Love and marriage. Love and marriage. Go together like a horse and carriage. Those Cole Porter lyrics made me think of the importance of marriage as an institution. Marriage is not just about commitment. It creates stability within the household, and you don't have to be conservative to accept that premise. There is something to be said about marriage, where it's a heterosexual marriage or a same-sex marriage, as a framework of cohesion, and it's not something we should dismiss. Whether it's not wearing a bicycle helmet while cycling, smoking cigarettes, or having children before marriage, while we have the economic right to make stupid or unwise decisions, that doesn't mean that we should, and even if we do, we should at least be well-informed before making a decision. The American Enterprise Institute's (AEI) provides such good information in its latest study on the topic, For richer, for poorer: How Family Structures Economic Success in America (Lerman and Wilcox, 2014), and shows just how much marriage is the cornerstone of a stable family life to raise children.

Looking at pre-tax income ratios from 1979 and 2012 (see below), we see a major uptick in inequality between households with married partners and unmarried partners. A couple major changes seen in family composition is increase in divorce and more single-parent households. This results in households with lower income and wealth, which means greater income inequality and wealth inequality. How much of the increase of family-income inequality over the past 35 years can we attribute to a lower marriage rate? According to the AEI study, as much as 41 percent (Lerman and Wilcox, p. 12). If America maintained the marriage rates that existed in 1980, the growth in median income of families with children would have been a whopping 44 percent higher (p. 3).

What makes the AEI study different from Left-leaning economists that focus primarily on wage stagnation is that the AEI study focuses on less-educated males and their declining share in the labor market. Technology, globalization, and a shift to a service-dominant economy have caused the wages of men without college degrees to decline both in real terms and relative to women's wages (p. 14). As a result, less-educated men are less financially desirable, which attributes to the decline in the marriage rate among those who are less educated. The AEI study also proposes the alternative theory that the lack of commitment [via marriage] slackens men's commitment to work and providing for one's family (p. 15). Both higher wages and the commitment of marriage seem to improve upon a man's work ethic and wages.

Marriage is not only good for the partners involved, but also for the children. Aside from the fact that marriage means that there are more economic resources to provide for the children, the stable, two-parent home leads to increased economic mobility and a myriad of positive social outcomes, including increased odds of completing high school (p. 22), working more hours per annum (p. 24), greater economic and social mobility (p. 23), a higher income premium (p. 24), and increased labor force engagement (p. 17).

Although I find that AEI's research did a fine job outlining the income disparities between those who are married and those who are not, it is not as if this was exactly groundbreaking. Even earlier this year, a very thorough, longitudinal study done at Harvard suggested that single-parent households were the single greatest cause of less income mobility. Marriage is an overall, positive social good that should be encouraged (see AEI study, p. 51-55 for policy proposals to encourage marriage). Some might think the institution of marriage is passé, but the reality is that it is a time-tested, stabilizing force that provides the best welfare for children.

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