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THE ROLE OF LABOR AND MARRIAGE MARKETS, PREFERENCE HETEROGENEITY, AND THE WELFARE SYSTEM IN THE LIFE CYCLE DECISIONS OF BLACK, HISPANIC, AND WHITE WOMEN *
Author(s) -
Keane Michael P.,
Wolpin Kenneth I.
Publication year - 2010
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.1468-2354.2010.00604.x
Subject(s) - counterfactual thinking , welfare , economics , preference , national longitudinal surveys , fertility , attendance , labour economics , demographic economics , work (physics) , microeconomics , psychology , social psychology , demography , population , economic growth , sociology , market economy , mechanical engineering , engineering
Using data from the NLSY79, we structurally estimate a dynamic model of the life cycle decisions of young women. The women make sequential joint decisions about school attendance, work, marriage, fertility, and welfare participation. We use the model to perform counterfactual simulations designed to shed light on three questions: (1) How much of observed minority–majority differences in behavior can be attributed to differences in labor market opportunities, marriage market opportunities, and preference heterogeneity? (2) How does the welfare system interact with these factors to augment those differences? (3) How can new cohorts that grow up under the new welfare system (Temporary Aid for Needy Families) be expected to behave compared to older cohorts?