What Accounts for the Increase in Single Households and the Stability in Fertility

Abstract

Between the mid seventies and the beginning of the nineties the share of single females grew dramatically in the U.S. (from 16% to 29%). So did the share of single mothers (from 12% to 17%). Total fertility remained constant over the same period. At the same time relative wages within and between sexes underwent huge changes. In this paper we measure the contribution that changes in relative wages had in accounting for these and other demographic facts. We construct a model where agents dier in sex, take marital status and fertility decisions and invest in their children’s human capital. Our ndings show that changes in relative earnings potential account for: i. 44% of the observed change in the share of single women in the bottom half of the earnings distribution, ii. half of the observed change in the share of single women in the top half, iii. 73% of the observed change in the share of single mothers with a sharper increase among women at the bottom of the earnings distribution. This is obtained through a drop in the model economy marriage rate that matches that found in the data. The model economy reproduces a positive inter-generational earnings correlation.

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