The Power of the Purse: The Differential Effects of Maternal and Paternal Income on Child Achievement

Na’ama Shenhav

A growing literature suggests that labor market forces may exert substantial influence over family outcomes by altering the outside options for potential marriage partners and increasing the bargaining power of women within marriage. This paper takes advantage of plausibly random changes to sex-specific wages to provide a comprehensive analysis of the effects of relative female to male outside options on the family outcomes of women and their children. The analysis proceeds in two steps. First, I show that increases in women’s relative outside options lead to a decline in the likelihood of marriage for those on the margin of a first marriage, and to increased matching with higher educated spouses among those that do marry. I also find that that women are not necessarily financially better off by choosing not to marry, despite the fact that higher relative outside options promote women’s financial independence. These findings imply that the increase in relative wage options can explain 20% of the decline in marriage between 1980 and 2010, and provide suggestive evidence that the economic disparity across married and single households may be in part be a reflection of a “willingness to pay” to delay a marriage with low net benefits. In the second step of the analysis -still to come -I will investigate how these changes in relative outside options for women impacted the health and educational well-being of their children.

About Na’ama Shenhav

Na’ama Shenhav is a doctoral candidate in Economics at the University of California, Davis. She holds a B.A. in Economics and Political Science from the University of California, Berkeley. Broadly, her research interests are in labor and public economics, with a specific attention towards understanding how public policies and changes in the labor market can impact educational disparities. Her dissertation studies the effects of women’s relative economic and political positions on family formation decisions and investments in children. Prior to graduate school, she had a diverse career working first as an economic consultant, and then as a financial analyst at Aspire Public Schools as part of the Education Pioneers Analyst Fellowship.