LABOR MARKET CONDITIONS AT SCHOOL-LEAVING: LONG-RUN EFFECTS ON MARRIAGE AND FERTILITY

I. INTRODUCTION Many adults postpone marriage and fertility aspirations until they complete their education and establish themselves in the workplace. Thus, labor market conditions at the time of school-leaving could affect--indeed, could persistently affect--marriage and fertility decisions. Understanding the long-term implications for marriage and fertility of labor market conditions at school-leaving is timely as the United States slowly recovers from the 2007-2009 recession, the largest economic downturn in the postwar era. Administrative data show that, during the downturn and recovery period, both marriage and fertility rates declined while the divorce rate increased (Centers for Disease Control and Prevention 2013; Martin et al. 2013). For example, the fertility rate declined each year between 2007 and 2011 and stood at 63.2 births per 1,000 (relative to 69.3 per 1,000 in 2007) women of age 15-44 years in 2011. In this study, we use longitudinal data drawn from the National Longitudinal Survey of Youth 1979 Cohort (NLSY79) to examine the persistent impact of labor market conditions at the time of school-leaving on marriage and fertility outcomes among men and women. A considerable amount of research documents the importance of contemporaneous labor market conditions for these marriage and fertility outcomes (Amato and Beattie 2011; Arkes and Shen 2014; Blau, Kahn, and Waldfogel 2000; Chowdhury 2013; Dehejia and Lleras-Muney 2004; Hellerstein and Morrill 2011; Lichter, Leclere, and Mclaughlin 1991; Mocan 1990; Schaller 2013; Schultz 1994; Wood 1995). Even though researchers have not yet reached a full consensus, the literature appears to suggest, on balance, that marriage and birth rates decline when labor market conditions weaken and that divorce rates increase. Potential mechanisms include job loss, wage and employment uncertainty, wealth shocks, reductions in home values, and changes in time costs. However, it is not clear how well research on the contemporaneous relationship between labor market conditions and marriage/fertility outcomes explains the importance of such conditions for entry into the labor market and the formation of an initial job match. At the same time, a robust line of labor economic research shows that school-leaving during periods of weak labor market conditions persistently depresses career outcomes (e.g., wages, earnings, and occupational prestige). However, the research has devoted relatively little attention to the impact of labor market conditions at the time of school-leaving on nonlabor market outcomes, such as marriage and fertility. Standard economic models of the family suggest that career profiles are important determinants of marriage market opportunities and the costs and benefits of children. We might therefore expect that factors affecting career profiles--such as labor market conditions at the time of school-leaving--may persistently affect marriage and fertility outcomes. Our findings suggest that men who left school when the state unemployment rate was high are less likely to be married and have children at age 45, but are more likely to be divorced. Women, however, are more likely to have children. II. RELATED WORK AND THEORETICAL PREDICTIONS Labor market conditions at the time of school-leaving may influence marriage and fertility outcomes by altering a worker's marriage market opportunities and the opportunity costs of child rearing. In this section, we review studies pointing to persistent effects of labor market conditions at the time of school-leaving on career outcomes. Next, we examine how the study findings can guide predictions for marriage and fertility outcomes. A. Related Work Workers who leave school when the unemployment rate is high have persistently worse career outcomes than otherwise similar workers (Altonji, Kahn, and Speer 2013; Brunner and Kuhn 2009; Genda, Kondo, and Ohta 2010; Hershbein 2012; Kahn 2010; Kondo 2007; Kwon, Milgrom, and Hwang 2010; Maclean 2014; Neumark 2002; Oreopoulos, von Wachter, and Heisz 2012; Oyer 2006, 2008). …