Economic Approaches to Understanding Nonmarital Fertility

This book chapter presents a strategy for modeling nonmarital fertility and marriage as separate decisions by gender. The growth of nonmarital fertility in the US and the differences by race and socioeconomic status are explained in a model by Willis (1995) on the labor market experiences of men and women. Nonmarital childbearing can be explained by the balance between mens ability to take advantage of womens willingness and ability to raise their children and mens low or zero economic costs of child support. The net impact of womens income and price effects could result in having no children or fewer children because the child costs are greater than what she may be willing to pay from her own full income. Public goods theory implies that allocations of joint incomes of both father and mother could increase the utility of both parents. But if the mother cares more than the father about the well-being of the children the greater will be the expenditures particularly from the mother because of free-riding associated with the provision of public goods. An efficient allocation of resources for child support is not expected in a noncooperative bargaining model (a Stackelberg model) between a single custodial mother and a noncustodial father. As the mother increases her income and is able to support the child at a more adequate level from her own resources the fathers optimum transfer of income tends to decrease and even reach zero. Marriage and a binding contract that includes provisions in a potential divorce settlement solves collective goods problems. Weiss and Willis argue that deadbeat dads may withdraw generous support that occurred within marriage when love trust and mutual altruism between husband and wife disappear in divorce. Argys and Peters argument is that cooperative agreements about shared resources are possible among parents not living together but these parents face many difficulties. Policy can directly raise the cost of nonmarital fertility to men.