Marriage, divorce and economic activity in the US: 1960–2008

Abstract

We utilize a time-series model to examine the interrelationship between marriage and divorce and their connections with macroeconomic conditions for the period 1960 to 2008. Our findings suggest that marriage and divorce are pro-cyclical, although macroeconomic conditions affect divorce only when the economy is underperforming. Marriage is pro-cyclical in all circumstances. Further, bidirectional causation exists, with marriage (divorce) affected by lagged rates of divorce (marriage).

Keywords:

• demographics
• marital formation
• GDP gap
• unemployment gap
• causality

JEL Classification:

• J12
• C32

Acknowledgement

We thank Todd Sandler for helpful feedback.

Notes

¹  We  have re-estimated the marriage equation in column 2 with the unemployment rate included along with and . Our results indicate that the parameter estimate on the unemployment rate (=0.222, with a p-value of 0.345) is insignificant. The parameter estimates on both and , however, remain significant.

²  The instrumental variables include the exogenous variables plus the lagged marriage and lagged divorce rates in the marriage equation in column 2 of Table 1 and in the divorce equation in column 2 of Table 2.

³  A man’s future labour market potential is important (Oreffice and Quintana-Domeque, 2010). Alm and Whittington (1995) show that the potential tax benefits are a significant determinant of the decision to marry.