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The role of relative income in the share of children born out-of-wedlock in the USA

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Abstract

This paper investigates the non-marital fertility evolution in the USA for the period between 1976 and 2016. Beyond the well-known determinants in this framework, we add and test for the Easterlin relative income hypothesis. Easterlin stresses the role of the material aspirations formed in childhood (denominator) relative to the current economic perspectives (numerator) of young men. That ratio defines the relative income. We employ panel dynamic techniques at the state level. We find a negative and statistically significant effect of the relative income in the share of children born out-of-wedlock. Most importantly, relative income is robust to the inclusion of marriage. The latter may imply a socio-economic mobility perspective.

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Notes

  1. For an informative review of the Easterlin hypothesis, see Macunovich (1998).

  2. Willoughby and James (2017) provide some evidence that young men in the USA wish to create their own family despite the fact they delay it. A fact they have called the “marriage paradox”.

  3. \(\bar{T}=\frac{n}{N}\), where n refers to the total number of usable observations and N denotes the number of individuals (states). For more details see Bruno (2005a).

  4. For technical reasons that relate to the STATA command (xtlsdvc) of the Bruno (2005b) bias-corrected estimator, we were forced to exclude the state-specific time trends in this case. As a mere substitute for the latter, we used a general time trend.

  5. The Hansen test is not provided by STATA for the heterogeneous slopes.

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Acknowledgements

This paper has been significantly improved by the comments received from the editor, Joakim Westerlund, and two anonymous referees. The authors are grateful to them.

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  1. Department of Economic Sciences, University of Macedonia, 156 Egnatia Str, 54636, Thessaloníki, Greece

    Georgios Mavropoulos & Theodore Panagiotidis

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  1. Georgios Mavropoulos
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  2. Theodore Panagiotidis
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Correspondence to Georgios Mavropoulos.

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Appendix

Appendix

See Tables 3, 4, 5, 6, 7 and 8.

Table 3 States included in the empirical analysis
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Table 4 Descriptive statistics
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Table 5 Slope heterogeneity test (Blomquist and Westerlund 2013)
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Table 6 Pesaran (2007) unit-root test
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Table 7 Pesaran (2015) cross-section dependence test
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Table 8 Wursten (2018) first-order serial correlation test
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Mavropoulos, G., Panagiotidis, T. The role of relative income in the share of children born out-of-wedlock in the USA. Empir Econ 64, 1105–1120 (2023). https://doi.org/10.1007/s00181-022-02285-7

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