WHAT DETERMINES FAMILY STRUCTURE

I. INTRODUCTION The most prevalent type of family structure in which children in the United States are raised today is the traditional one, in which both biological parents are present in the home and married. But in the past 30-40 years, it has become increasingly common for children to experience alternative family structures, such as living with the mother with no father present, the mother and a stepfather, and cohabiting parents. Children who grow up in a family with married biological parents have better education, employment, marriage, childbearing, and psychological outcomes on average than their counterparts who spend substantial parts of childhood living in alternative family structures. (1) These differences are generally quite large and dwarf the effects of income and maternal employment. The evidence suggests that at least part of the association between family structure and child outcomes is causal. There is much still to be learned about the consequences of growing up in alternative family structures, but there is a consensus that family structure matters for child development. In contrast, there is much less known about the determinants of family structure. The proximate determinants of family structure are well-studied demographic behaviors: union formation and dissolution, transition from cohabitation to marriage, and fertility, both in and outside of unions. But the implications of adult demographic behaviors for the family structure experiences of children depend crucially on interactions among these behaviors. For example, the impact on a child of being born out of wedlock is likely to depend on whether the mother and biological father subsequently marry or cohabit, and if so, how soon after the birth of the child. The impact on a child of the dissolution of a union may depend on whether the man in the union was the child's biological father or a stepfather and on the duration of the union. Economic theories of family formation and dissolution suggest a number of observable factors that affect the demographic behaviors that determine family structure. (2) These include the wage rates available to men and women; the tax and transfer incentives to cohabit, marry, and bear children; the legal environment governing divorce and child support provided by absent parents; and the state of the marriage market. Many studies have examined the effects of these factors on the family structure experiences of children, but most have taken a narrow approach. For example, a typical study examines the impact of changes over time in one or two determinants of family structure, without considering the implications of simultaneous changes in other factors. Most studies examine only one or two of the key demographic behaviors that determine the family structure experienced by children. For example, one study might focus only on entry to cohabitation and marriage, whereas another study examines childbearing while single, and a third study analyzes marital dissolution. In this article, we propose a new approach to analyze the determinants of the family structure experiences of children. Our approach has four distinguishing features. First, we jointly model union formation, union dissolution, and childbearing decisions. Previous analyses have integrated some of these behaviors in a single model, but none has integrated the full range of behaviors needed for a thorough analysis of family structure. A major feature of change in recent years has been de-linking of marriage and childbearing decisions. Hence, it is crucial to recognize, as emphasized by Ellwood and Jencks (2004), that marriage and childbearing are in fact distinct decisions and that treating "single parenthood" as one decision rather than the consequence of related but distinct union and childbearing decisions misses key elements of changes in behavior. Furthermore, Bumpass and Lu (2000) point out that a substantial part of the increase in single parenthood in the last three decades can be accounted for by a rise in the presence of children with cohabiting parents, but child outcomes are worse in cohabitation than marriage, other things equal. …