Date of Award

Spring 5-15-2019

Author's School

Graduate School of Arts and Sciences

Author's Department

Economics

Degree Name

Doctor of Philosophy (PhD)

Degree Type

Dissertation

Abstract

Cohabitation, Marriage, and Fertility: Divergent Patterns for Different Education Groups. The United States has been experiencing a long-term decline in the rates of marriage and fertility and a steady rise in cohabitation. Contradicting the prediction of standard theory that emphasizes the opportunity cost of childrearing from labor market and gender specialization, skilled females have experienced a less pronounced drop in marriage and fertility, while unskilled females have experienced a more evident increase in cohabitation. I propose the following mechanisms to understand this puzzle: for high-skilled females, the higher implicit return of investment in children’s human capital compensates for part of the growing opportunity cost of childrearing; a significant income effect from positive assortative matching dominates the conventional wage channel; and when childrearing resource cost increases, a strong selection effect exists whereby those with strong fertility motives shift into marriage. To quantitatively discipline the relative importance of different factors, I theorize the trade-off between market work and childrearing activities by examining decisions about consumption, marital status, and fertility. Counterfactual exercises show that 34.81% of the rise in cohabitation and 42.42% of the drop in marriage for the skilled can be explained by the rising returns of children, and 38.06% and 40.07%, respectively, for the unskilled. In addition to the returns of children, rising childrearing cost plays a significant role in explaining the declining fertility rates, contributing to 90.96% and 50.79% of the drop in fertility for the two skill groups. Most of the shrinking cohabitation gap and widening marriage gap between the two skill groups can be attributed to the rising wage and skill premium, increasing childrearing costs, and the growing returns of children.

Skill Biased Entrepreneurial Decline: The U.S. is undergoing a long-term decline in the rate of firm startups. We find that this slowdown in entrepreneurship is more pronounced for skilled individuals. In particular, between 1985 and 2015 entry into entrepreneurship declined by 21% for those with at least a college degree and increased by 11% for those with a high school degree or some college experience. We posit that this skill biased entrepreneurial decline is a response to the changing income structure of workers and entrepreneurs that occurred over the same period. In support of this view, we find that, for skilled individuals, entrepreneurial income grew more slowly than worker’s income while for unskilled individuals both incomes grew at relatively similar rates. We also provide evidence for entrepreneurial polarization consistent with wage polarization. To quantify the impact of income structure on entrepreneurial entry we develop a simple heterogeneous-agent, occupational choice model which takes as given a rising worker skill premium, driven by skill biased technical change. In the model, the rising worker skill premium can account for around two-thirds of the changes in entry among skilled and unskilled individuals. This paper contributes to understanding the forces behind the broader decline in business dynamism in the U.S. and suggests an integral role of rising income inequality.

The Timing of Childbearing: Theory and Quantitative Analysis. As significant as the shift from quantity to quality in fertility decisions, a rise in the age at first birth has been commonly observed in the more developed world. This paper attempts to understand such demographic trend both theoretically and empirically. We develop a continuous-time life- cycle model, in which a married woman decides when to have her first child and how she allocates her time to human capital accumulation and market activity. We then calibrate the benchmark model using data from CPS and generalize the model to allow for heterogeneous skill levels. We find that fertility-related productivity loss and job security play a more important role than the conventional human capital channel in terms of explaining the childbearing timing differentials between skill groups, and women are more sensitive to changes in fertility preference as opposed to leisure loss. Compared with high-skilled women, low-skilled women are more vulnerable to changes in labor productivity, human capital, husband’s income, utility derived from children and the disutility in raising children. As a result, low-skilled women push up or defer their timing of childbirth more relative to high-skilled women.

Language

English (en)

Chair and Committee

Ping Wang

Committee Members

Gaetano Antinolfi, David Wiczer, Yongseok Shin, Oksana Leukhina,

Comments

Permanent URL: https://doi.org/10.7936/7bs9-rg04

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