Wife's labor supply and marital dissolution: evidence from the NLSY79

Abstract

In response to the changing family and social structures in the United States, an accurate understanding of mechanisms and the driving forces of marrital dissolution is important in many aspects. For one, the knowledge helps policy and law makers to conjecture possible results of the legislation (e.g. unilateral divorce law, child alimony, or child custody), and the welfare system (e.g. welfare benefits to children and women after divorce) on marriages, divorces, and labor supply. Our goal is to provide additional evidence to a debatable issue in labor and family economics: Does married women's labor supply increases the chance of their future divorces? or is the relationship the other way around? Prior studies have produced conflicting results. We first propose and estimate a dynamic model, namely a divorce hazard analysis, that allows us to predict the risks of marital dissolution at different stages during the marital life course as a function of endogenous wife's labor supply. By estimating the proposed model on a more recent data set, the NLSY79, we hope to address econometrics issues occured in earlier studies, as well as present new evidence for these competing claims.