The economic consequences of absent

29 Pages·2007·3.1 MB·English

The Economic Consequences of Absent Parents
Author(s): Marianne E. Page and Ann Huff Stevens
Source: The Journal of Human Resources, Vol. 39, No. 1, (Winter, 2004), pp. 80-107
Published by: University of Wisconsin Press
Stable URL: http://www.jstor.org/stable/3559006
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The Economic Consequences of
Absent Parents
Marianne E. Page
Ann Huff Stevens
ABSTRACT
We examine the effects of family structure on economic resources, control-
ling for unobservable family characteristics. In the year following a di-
vorce, family income falls by 41 percent and family food consumption
falls by 18 percent. Six or more years later, the family income of the aver-
age child whose parent remains unmarried is 45 percent lower than it
would have been if the divorce had not occurred. Marriage raises the
long-run family income of children born to single parents by 45 percent.
These estimates are substantially smaller than the losses that are implied
by cross-sectional comparisons across family types.
I. Introduction
Over the past 50 years the numbero f single-parentf amilies in the
United States has skyrocketed.B etween 1960 and 1995, the numbero f children
living apartf rom one of theirp arentsi ncreasedf rom 12 percentt o almost4 0 percent
(McLanahan1 997), the rate of divorce increasedb y over 200 percent( Friedberg
1998) and the fractiono f childrenb orn out of wedlock rose from about5 percent
to more than 30 percent( Canciana nd Reed 2000). Half of all Americanc hildren
today are expectedt o spendp arto f theirc hildhoodi n a family headedb y a mother
who is divorced,s eparatedu, nwed, or widowed (Bumpassa nd Raley 1995).
MarianneP age is an associatep rofessor of economicsa t the Universityo f California-DavisA. nn Ste-
vens is an associatep rofessoro f economicsa t the Universityo f California-Davis.T hea uthorsa re
gratefult o TomD eLeire,S usanM ayer,a nd seminarp articipantsa t Indiana University-PurduUe niver-
sity Indianapolis,t he Joint Centerf or PovertyR esearch,N ational Bureauo f EconomicR esearch,S yra-
cuse University,U niversityo f British Columbia,U niversityo f Michigan,U niversityo f Toronto,a nd
Universityo f Wisconsinfo r their helpfulc ommentsM. uch of the worko n this project was completed
while Page was a visitings cholar at the Joint Centerf or PovertyR esearch.T he data used in this arti-
cle can be obtainedb eginningA ugust2 004 throughJ uly 2007from the authors.
[SubmittedF ebruary2 002; acceptedJ uly 2002]
ISSN 022-166X ? 2004 by the Boardo f Regentso f the Universityo f WisconsinS ystem
THE JOURNAL OF HUMAN RESOURCES * XXXIX * 1
Page and Stevens 81
Whatd oes this changei n familys tructurem eanf or Americanc hildren?I n particu-
lar, to what extenta re the economicr esourcesa vailablet o childrenl iving in single-
parentf amilies compromisedb y the absenceo f a second cohabitatinga dult?'S ocial
scientists often assess the "effect"o f family structureo n economic well-being by
comparingt he averagei ncome amongt wo-parentf amilies to the averagei ncome of
single-parenfta milies( McLanahana ndC asper1 995;S paina ndB ianchi 1996;W aite
1995). Theses tudiesu nequivocallys how thatf amily structureis substantiallyr elated
to economic well-being,a nd are often cited by those who advocatef or societal and
legal changes that would strengthenm arriage( for example, Whitehead1 996). In
spite of their wide use, however, these types of statisticsa re unablet o tell us how
much of the observed gap is actually caused by the absence of a second parent.
Cross-sectionalc omparisonsa cross family types do not necessarilyi ndicate how
single-parenfta milies would fare were they to become two-parentf amilies because
other factorsm ay be partlyr esponsiblef or the variationi n resourcel evels.
The causale ffect of family structureo n a family's resourcesh as importantim pli-
cations for public policy. In recent years, the belief that marriageb estows large
economic gains has generatede nthusiasmf or policy proposalst hat encouraget he
formationa nd continuationo f two-parentf amilies (Gallager1 996; Galston 1996;
Ooms 1996; Popenoe 1996; Waite 1995; Whitehead1 996). This enthusiasmh as
lead to severalp olicy changes:T he states of Arizona,A rkansas,a nd Louisiana,f or
example,h ave created" covenanmt arriages,"in whichc ouples agreea t the time they
are marriedt o conditionst hatm akei t harderf or themt o divorce.2I n addition,a bout
three quarterso f states have broadenedt he eligibility criteriaf or the Temporary
Assistance to Needy Families (TANF) programt o include two-parentf amilies.
TANF's formeri ncarnationa s the Aid to Familiesw ith DependentC hildrenp rogram
(AFDC) was targetedt owards ingle-parenfta milies on the groundst hat childreni n
such familiess uffere conomicl osses as a directr esulto f theirp arents'm aritals tatus.
If the losses to childreng rowing up in single-parentf amilies are small, then the
groundsf or this type of targetingm ay be tenuous.I f these losses arel arge,h owever,
then targetedc ash assistancem ay be an appropriatme eans of mitigatingt hem.
This studyh as threeg oals. Our first goal is to estimateh ow much the economic
status of single-parentc hildrenc ould be improvedi f they lived with both of their
parents.E xisting data do not allow us to answert his question directly, since we
cannotd irectlyo bservec hildren'sc onsumptiono f goods and services.H owever,w e
are able to estimateh ow the income and food expenditureso f children'sf amilies
are affectedb y family structureu, sing a dynamicm odel with longitudinald atat hat
allows us to incorporatefa mily-specificf ixed effects. We look separatelya t the im-
pact of divorce and out-of-wedlockc hildbearingA. lthougho thers tudies have esti-
matedc hangesi n family income following divorce,t hey have focused on compari-
1. Of course,t herea re also noneconomicc onsequenceso f living in a single-parenfta mily. Comparedto
childrenl iving in two-parentf amilies,c hildrenl iving in mother-onlyf amilies are less likely to grow up
with a male role model, for example.O n the otherh and,s uch childrenm ay benefitf rom less exposuret o
maritalt ensiont hant hey would experiencei f theirp arentsw ere marriedU. nderstandintgh e full rangeo f
social, psychological,e motional,a nd economicb ehaviorst hat are affected by family structureis beyond
the scope of this paper.
2. Legislationf or covenant marriagesh as also passed one house in Georgia,O klahoma,O regon, and
Texas.
82 The Journalo f HumanR esources
sons of predivorcet o post-divorcer esources,w hich do not take lifecycle earnings
growthi nto account,a nda ret husl ikely to underestimatteh e truel oss. To ourk nowl-
edge, there have been no studies that have used a fixed-effectsm odel to estimate
the resourcec osts associatedw ith being born to a single parent.
Ourd ynamicm odel also allows us to traceo ut the family-levele conomicl osses
thata re associatedw ith single-parenst tatuso ver an extendedt ime interval.C hildren
whosep arentsd ivorce,f or example,m ay experiencea short-termre ductionin family
income that is recoupedi n latery ears when theirm othersr emarryo r become more
activel aborf orce participantsQ. uantifyingt he time-patho f economicl osses follow-
ing a divorceo r out-of-wedlockb irthi s particularlyim portanitn the wake of TANF,
whichp laces a five-yearl ifetimel imit on receipto f benefits,a ndr equirest hatp artici-
pantsb ecome memberso f the laborf orce within two years of initiatingb enefits.I f
the costs of growingu p in a single-parenfta mily persistf or many years, then these
time limits may have serious implicationsf or children'sw ell-being.
Finally,w e use ourm odelt o examineh ow family structurea ffectst he components
of incomeo ver time. We look separatelya t changesi n fathers'e arnedi ncome,m oth-
er's earnedi ncome, child supporta nd alimonyp ayments,a nd welfarei ncome. This
exercisea llows us to see how families modifyt heirb ehaviori n responset o a change
in maritals tatus.
We find that controllingf or unobservablef amily backgroundc haracteristicsis
importantS. implec ross-sectionafl amilyi ncomec omparisonsb etweenc hildrenb orn
out of wedlock and childrenb orn into two-parentf amilies, for example,a re almost
1.8 times bigger than our estimatedc ost of being born to a single mother.O LS
regressionsp roducec oefficiente stimateso f the effects of marriagea mongc hildren
born to single parentst hat are almost twice as large as our fixed-effectse stimates.
OLS estimateso f the effects of divorcea mongc hildrenb ornt o two parentsa rem ore
than2 0 percenth ighert hant he correspondingfi xed-effectse stimates.N evertheless,
even afterc ontrollingf or unobservablesw, e estimatel argef amily structuree ffects.
Ourd ynamica nalysisa lso shows thatt he gains associatedw ith marriagef all some-
what over time for childrenb orn out of wedlock and that the initial losses experi-
enced by childrenw hose parentsd ivorcea re partiallyr ecoveredi n latery ears.M ost
of this recoveryi s explainedb y the fact thata substantiaflr actiono f divorcedm others
remarryF. inally, our dynamici ncome decompositionss uggestt hatf amiliesr espond
to the absence of a second parenti n a varietyo f ways that help mitigates ome of
the costs.
II. Estimating the Cost of Growing Up in a Single
Parent Family
A. Background
It is well known that childreng rowingu p in single-parentf amilies have lower in-
comes than childrenl iving in two-parentf amilies. In 1999, for example, median
family income for a two-parentf amily with childrenw as $60,296, whereasm edian
family income for a female-headedf amily with childrenw as $22,418 (CensusB u-
reau, March2 000 CPS). McLanahana nd Sandefur( 1994) estimate similard iffer-
Page and Stevens 83
ences in assets across family types: Using the PSID, they find that while 98 percent
of two-parent families with an adolescent child own their own car, only 70 percent
of similarly defined single-parent families own a car. Likewise, only 50 percent of
such families own their home, whereas 87 percent of two-parent families (with an
adolescent) are homeowners. Many believe that these differences in resources can
explain a significant part of the well-documented differences in socioeconomic out-
comes between adults who grew up in two-parent families and adults who grew up
in single parent families. McLanahan and Sandefur, (1994), for example, attribute
half of the difference in outcomes to differences in family income.3
Cross-sectional comparisons of income across different family types can be mis-
leading, however. Table 1 shows that even prior to marital dissolution average family
income and consumption are lower for families that will eventually go through di-
vorce than for families that will remain intact. This suggests that part of the difference
may exist for reasons other than differences in family structure. Previous researchers
have noted this problem, but have struggled to address it,4 particularly when assess-
ing the economic consequences for children born out of wedlock-the only estimates
we have been able to find for these children are simple cross-sectional comparisons
like those discussed earlier. Researchers have typically estimated the costs of divorce
by comparing changes in income across two time periods, before and after a divorce
occurs (for a review, see Holden and Smock 1991; also McLanahan and Sandefur
1994), but while cross-sectional comparisons are likely to overstate the effect of
family structure, estimates based on simple "before and after"c omparisons are likely
to be downward biased because they do not control for lifecycle earnings growth.
Most of these studies do not include a control group. Another drawback is that when
the comparisons are restricted to only two points in time they overlook the possibility
of dynamic adjustments to changes in marital status. The few studies that examine
the time-path of income following divorce (Bane and Weiss 1980; Butrica 1998;
Duncan and Hoffman 1985a, 1985b; Peterson 1989; Stirling 1989; Weiss 1984) are
typically based on nonrepresentative, dated samples.5 More important, none of them
employ regression analysis, so they are unable to control for what income growth
would have been in the absence of the divorce or to control for other factors that
may be changing over time.
Duncan and Hoffman (1985a, 1985b) (with a follow-up by Butrica 1998) provide
the most comprehensive dynamic study to date. Using the PSID, they trace out family
income for a sample of children between the ages of one and five in the year prior
to their parents' divorce, from the year before the divorce until five years after the
3. It is importantto note thatt herei s debatea boutt he extentt o which incomea ffectsc hildren'so utcomes.
Mayer( 1997), for example,u ses differentm ethodsa nd findsl ittle evidencet hati ncomep lays a larger ole
in children'so utcomes.
4. Smock,M anning,a nd Gupta( 1999) attemptt o deal with the selectionp roblemb y estimatinge ndoge-
nous switching regressionm odels. Their exclusion restrictionsi nclude whethert he respondent( wife)
workedf ull-timep riort o the divorce,w hethers he lived with both her biologicalp arentsb efore age 14,
her mother'se ducationala ttainmenta, ge at the time of the marriage,d urationo f marriagea nd whether
the marriagew as a first marriagef or both spouses. The authorsa rgue that these variablesp redictt he
likelihoodo f maritald isruptionT. hese variablesa re also likely to be correlatedw ith income, however.
5. Bane and Weiss (1980) and Weiss (1984), for example,r estrictt heir analysist o a sample of women
who remainu nmarriedP. eterson( 1989) focuses on women aged 30-44 in 1967. Stirling (1989) looks
only at women who have been divorcedf or at least five years.
0-0P
CD
Table 1 0
Sample Means in Year of Birth
0
Born into Two-ParentF amily Born into Single-ParentF amily
Remain
Remaini n Two- Parents in Single- ParentE ventually
ParentF amily Divorce ParentF amily Marries
Cs
Pre-tax family income 41,945 34,414 17,446 17,571 CcnD
(26,948) (28,084) (18,635) (15,926)
Log (pre-taxf amily income) 10.45 10.16 9.27 9.30
(0.74) (1.08) (1.23) (1.30)
Food consumption 5,877 5,284 4,271 4,392
(2,778) (2,380) (2,642) (2,913)
Mother's education < = high school 0.55 0.62 0.78 0.75
(0.50) (0.49) (0.41) (0.43)
Black 0.08 0.11 0.65 0.39
(0.27) (0.31) (0.48) (0.48)
Family size 4.14 3.92 4.47 3.86
(1.32) (1.10) (2.05) (1.98)
Numbero f childreni n sample 6,228 1,235 1,577 465
Note: Standardd eviationsi n parentheses.
Page and Stevens 85
divorce.T heirs tudyi s based on divorceso r separationsth ato ccurredb etween 1969
and 1975. The divorceds ample'si ncomei n the years aroundt he maritald issolution
is comparedw ith income for a sampleo f childreni n continuouslym arriedf amilies
between 1971 and 1977. Duncana ndH offmanf ind thatt he averagei ncome of chil-
dren whose parents'd ivorce or separatef alls by about3 0 percenti n the year after
the divorce,b utt hatw ithinf ive yearso f the maritald issolution,t heira veragei ncome
is close to its predivorcel evel. Most of this recoveryc an be explainedb y high rates
of remarriageF: or childrenw hose mothersr emainu nmarriedth roughoutth e obser-
vationp eriod,i ncome levels remaina bout3 0 percentb elow theiri nitiall evels. Fur-
thermore,a lthoughc hildrenw hose mothersr emarryr egain their previousl evels of
income, they never catch up to their peers whose parentsr emainm arriedb ecause
incomes in continuouslym arriedf amilies grow throughoutth e period.
Our studyi s similari n spiritt o that of Duncana nd Hoffman,b ut it goes beyond
theirw orkb y employinga morec omprehensives tatisticalm ethodology.O ure mpiri-
cal frameworka llows us to control for income growth over the lifecycle, which
enablesu s to estimatet he effects of divorceo n incomea ndf ood consumptionr elative
to what they would have been if the divorceh ad not takenp lace. We are also able
to allow for differencesi n income growth across family types, and to control for
macroeconomicfa ctorsw hose omissionm ay bias previouse stimates.O urs tudye x-
tends Duncan and Hoffman's sample by 12 years, and includes childrenb etween
birtha nd age 16 insteado f betweent he ages of 1 and5 . Focusingo n young children
(and,t hereforey, oungp arents)c ould lead to biased estimateso f the averaged ivorce
effect since earningsg rowth is steepera mong young workersa nd since mothers'
labor supplyi s lowest when theirc hildrena re young.6
To ourk nowledge,t hereh aveb een no attemptst o takeu nobservableisn to account
when estimatingt he economic losses experiencedb y childrenw ho are borno ut of
wedlock.7C ross-periodc omparisonsh ave not been appliedt o this group,p resumably
because it is difficultt o come up with an appropriate" initial"p eriod. Our model
can be extendedt o provide such estimates,h owever. Using a sample of children
born into single-parentf amilies, we estimatet he family income and consumption
increasese xperiencedw hen theirm othersm arrya ndi nterprett he negativeo f these
estimatesa s upperb oundso n the loss associatedw ith single-parenst tatus.I f women
who marryh ave largerp otentialg ains to marriaget han those who do not marry,
then our estimatesw ill overstatet he gains to marriagef or the child in the typical
out-of-wedlockh ousehold,b ut they will still be lower thant he cross-sectionals tatis-
tics that are currentlyc ited becauset hey will be basedo n a model thatc ontrolsf or
fixed effects.
6. Since mothers'l abors upplyh as been increasingo ver time, the divorcee ffect may be smalleri n more
recenty ears.O ura bilityt o include 12 additionayl ears of data may thereforea ffect the averagee stimates
as well.
7. There is a large relatedl iteratureo n the relationshipb etween teen/out-of-wedlockc hildbearinga nd
mothers's ocioeconomico utcomes,w hichf ocuseso n a differentc ounterfactuaIl.n thatl iteraturet,h e ques-
tion of interesti s "Howm uchb ettero ff wouldt he mothersb e if theyd id not have a child out-of-wedlock?"
Alternativec hoices for those women would included elayingc hildbearingu ntil marriageo r choosingn ot
to have a child at all. Ouri nterestf ocuses on how muchb ettero ff childrenw ould be if theirm othersw ere
married.T his questioni s differenti n that the alternativeso f choosing not to have a child or to delay
childbearinga re not relevant.S ee Section IVB for additionald iscussiono f this literature.
86 The Journalo f HumanR esources
B. EconometricM odel
Ourb asic approachis to use a fixed-effectse stimatort o controlf or unobservedf am-
ily characteristictsh at may be correlatedw ith divorce and marriagep robabilities,
using data for childrenw hose parents'm aritals tatusc hangeda t some point during
our observationw indow and a comparisong roupo f childrenw hose parents'm arital
statusd id not changed uringt he period.S pecifically,g iven longitudinadl atao n fam-
ily income andc onsumptiona ndm aritalh istories,t he effects of divorcec an be mod-
eled in the following way:
(1) In Iit = Xit + Di,6 + ai + yt + it
where li, is a measureo f the householdi ncome (or food consumption)o f child i in
year t, Xi, is a vector of child/familys pecific variablest hat vary over time and that
may be correlatedw ith the child's economic status,a nd Di is a vector of dummy
variablesi ndicatingt hat a divorceh as taken place in a future,c urrent,o r previous
year. The errort ermh as threec omponents,a child-specificf ixed effect, a,, a year-
specific effect, t,,a nd a randomc omponent,u i,.
The vector of divorce indicators( Di) containst hreet ypes of variables:D ummy
variablest hat equal one in the years priort o the divorce, a dummyv ariablee qual
to one in the year that the divorce takes place, and a series of dummyv ariables
indicatingt hat a divorce took place in a previous year. The first set of indicator
variablesc apturest he possibilityt hati ncome andc onsumptionm ay begin to deterio-
rate prior to the actual divorce. This might happeni f, for example, a divorce is
precipitatedb y a parent'sj ob loss: Failuret o include" yearsp rior"d ummiesw ould
lead to a biased estimateo f the effect of the divorce.O urm odel, thereforei, ncludes
a dummy variablef or each of the two years precedingt he divorce. The dummy
variablei ndicatingt he year of the divorce capturest he immediatee ffect of the di-
vorce on family income and consumption,w hereast he coefficients on the set of
variablesi ndicatingt hat a divorceh as takenp lace in a previousy ear will reflectt he
persistenceo f the divorce effect over time. We follow the post-divorcep eriod for
six years,i ncludinga dummyv ariablei ndicatingt hats ix or morey earsh ave elapsed
since the divorce took place.
The errort ermi n the abovee quationc ontainsa time-invariancth ild-specifice ffect,
a,, which capturesa nythinga boutt he child's familyt hati s constanto vert ime. Since
most childreni n single parentf amilies live with their mothers,t his variablew ill
primarilyp ick up characteristicos f the child's mothert hat may be correlatedw ith
both divorcep robabilitiesa nd the family's income. If mothersw ith lower earnings
capacitya re more susceptiblet o divorce, then estimateso f divorce effects that fail
to control for ai will be biased towardf inding largerl osses. As discussed above,
others tudiesh ave estimatedt he losses associatedw ith divorceb y comparingf amily
income in a particularp eriod before the divorce to income in a particularp eriod
after the divorce, but unless this change is comparedt o an appropriatec ontrol
group the estimatesp roducedu sing this method will not tell us how much more
income the childrenw ould have had if theirp arentsh ad remainedt ogether.F urther-
more,t he approachm ay overstateo r understateth e averagea nnuall osses associated
with the event, dependingo n which "before"a nd "after"y ears are chosen.T he ad-
vantageo f the model we employ is that it traceso ut the economic consequencesi n
Page and Stevens 87
each year following the divorce and allows us to estimateb oth the short-terma nd
long-terme ffects, which may differ.
Becauset his model includesf ixed effects, the variablesi n X thatd o not vary over
time, such as race and mother'se ducation,a ree liminatedf rom the model. The only
variablesi ncludedi n X aret he child's age, his age squareda, ndf amilys ize.8E quation
1 also includesa vector of calendar-yeadr ummyv ariables( y,). These variablesw ill
control for economy-widei ncome and consumptionc hanges over time, including
both business-cyclee ffects and trendsi n income and consumptiono ver the period
we study.
Unbiasede stimateso f the economic consequenceso f being born into a single-
parentf amily are even more elusive than unbiasede stimateso f divorce effects be-
cause unliket he case of divorcet herei s no obvious "before"p eriodt o comparet he
single-parentf amily's income or consumption.A s a result, existing informationi s
limited to simple cross-sectionalc omparisons.W e propose an alternativew ay of
estimatingt hesel osses thata llowsu s to incorporatefa mily fixed effects. Specifically,
using a longitudinals ample of childrenb orn out of wedlock we can estimate the
parameterso f the following model
(2) In lit = XitP + Mit8 + ai + t + uit
WhereM iti s a vectoro f dummyv ariablesi ndicatingt hat a marriageh as takenp lace
in a future,c urrento, r previousy ear.T he negativeo f these parametercs an be inter-
preteda s the loss associatedw ithr emainingi n a single-parenfta milyt hatw as formed
by an out-of-wedlockb irth.T his model is essentiallyt he inverse of Equation1 in
that it comparesc hanges over time in the family income and family consumption
of childrenw hose parents'm arrieda t some point duringo ur observationw indow
to changes over time for those families in which the parentsr emaineds ingle. The
advantageo f this approachi s that it allows us to control for unobservablec hild/
family specific factorst hat may be correlatedw ith both maritald ecisions and eco-
nomic status.
Oure stimateso f 6 providei nformationo n the effects of changesi n family struc-
ture on the childrenw ho experiencet hem. In the languageo f Heckman,L aLonde,
and Smith( 1999) we estimatet he effect of "treatmenotn the treated."I f the impact
of divorceo r marriagew ouldb e differentf or childrenw hose family structurree mains
constanto ver time, then 6 will be a biased estimateo f the averagee ffect thatd ivorce
or marriagew ould have on the population.F or example, if the gains to marriage
are largerf or womenw ho choose to marryt hanf or women who choose not to marry
then our estimateso f 6 will be upward-biasedes timateso f the costs of growingu p
in a single-parentf amily formedb y an out-of-wedlockb irth. We show, however,
thate ven with this upwardb ias our estimatesa re substantiallys mallert hane stimates
thatd o not controlf or fixed effects. Furthermoreth, ey do directlya pplyt o the major-
ity of childrenb orn to single mothers,s ince 52 percento f childrenb orn to single
parentsh ave spent some time in a two-parenth ouseholdb y the time they reacha ge
8. In the consumptionre gressionsw e also controlf or the family's" foodn eeds,"w hichi s a variablec reated
by the PSID to measuret he caloric needs of the family, accountingf or family size, sex, and the age of
the family members.
88 The Journalo f HumanR esources
15. Fortyp ercento f thesec hildrene xperiencea t least one yeari n a two-parenht ouse-
hold by the age of six.
In the case of divorce, similari ssues arise; we estimate the family-level effects
of divorce among those childrenw hose parentsd o actually divorce. In this case,
however, it is less clear how estimates of divorce effects for the untreatedg roup
would be of interest to policymakers.W e care about how much better off the
"treated"ch ildrenw ouldb e if theirp arentsh adn ot divorced.E stimateso f the popula-
tion-widee ffect of divorce would not answert his question.
III. Data
Ourd atac ome fromt he 1968 through1 993 waves of the PanelS tudy
of Income Dynamics, a longitudinals urvey conductedb y the Universityo f Michi-
gan's Institutef or Social Research.T he PSIDb eganb y interviewinga nationalp rob-
abilitys ampleo f familiesi n 1968 andh as reinterviewedth e memberso f those fami-
lies every year since. The PSID also follows a subsampleo f families in poverty.
We make use of both samplesi n ordert o increaset he precisiono f the estimates.
Ourr egressionsa re weightedu sing the individualw eights for the last year in which
the individuali s observed.
Since our primaryi nteresti s in how family structurea ffects children'sa ccess to
economic resources,o ur sample consists of childrenw ho are potentiallyf ollowed
from the year of birthu ntil age 16. Our analysisi s based on two samples:T he first
sample consists of childrenb orn into two-parentf amilies, and the second sample
consists of childrenb orni nto single-parenfta milies.W e use the firsts amplet o esti-
mate the effects of divorce,a nd the second samplet o estimatet he losses associated
with being born out of wedlock. Childrenw ho were born priort o the 1968 survey
are excludedf rom the sampleb ecausew e cannotd eterminew hethert hey were born
into a two-parenot r single-parenfta mily.A fteri ndividualst urn1 6 they aren o longer
followed, becausew e wantt o be sure that any observedc hangesi n family structure
are associated with their family of origin. Some PSID childrena re not present
throughoutth e entire lengtho f the survey.W e include these individualsf rom birth
until the firsty ear they are missing data,b ut do not include themi n any subsequent
years even if they have valid data,b ecause the missing years make it impossiblet o
determinep arents'm aritals tatusi n thaty ear, and, therefore,t o accuratelya scertain
the numbero f years since a change in family structuret ook place.
We use two differentm easureso f a family's economicr esources:T he log of fam-
ily income, and the log of family food consumptionE. ach of these measuresh as its
pros and cons as a measureo f economic well-being.A numbero f researchersh ave
arguedt hat consumptionm easuresa re preferablet o income measuresb ecause in-
come systematicallyu nderstatetsh e financialr esourcesa vailablet o a household,a nd
because consumptioni s a more direct measureo f well-being (Meyer and Sullivan
2001). Unfortunatelyc, onsumptionin formationin the PSID is limitedt o food con-
sumption,a nd althoughf ood consumptioni s the sort of necessarye xpendituret hat
is of interestt o policymakerso, ne mighte xpectt o see less variationin food expendi-
tures than in almost any other consumptioni tem: Families may spend down their