Cohabitation, Fertility, and Child Development

According to Bumpass and Lu (2000), the proportion of children born to cohabiting parents increased from 6% in the early 1980s to over 16% at the end of the twientieth century. However, very little is known about the cognitive and noncognitive development of children raised in cohabiting families. The main problem is that cohabitation tends to occur in selected households. In particular, couples with lower socio‐economic status are more likely to cohabit. The main purpose of this project is to study how fertility and child investment decisions differ between cohabiting and married couples and how much of this difference accounts for the inequality in outcomes at adult lives of the children. We construct the data on relationship history of the NLSY/1979 by combining information from many different sources within that survey. We plan to develop an estimable model of fertility, marital status, and investments in child skills. At each point in time, the woman receives a marriage offer. She may decide to accept the marriage, to engage in cohabitation, or to remain single. At each period she is married or cohabiting, she observes the signal on the quality of the match. This information is used by the woman to make her fertility decisions. Given that a couple has a child, they decide how much to invest in the development of skills of the child. This modelling is innovative because it combines residential/marital status, fertility choices, child investment decisions, and their consequences by looking at adult outcomes such as education attainment of the children. We plan to use the estimated model to investigate the impact of policies that make cohabitation less appealing in comparison to marriage (such as a tax bonus to being married). We believe that the project will lay the foundations for a larger proposal to NIH or NSF.