The Economics of Nonmarital Childbearing and the Marriage Premium for Children

A large body of literature exists on the impact of family structure on children's outcomes, typically focusing on average effects. In this review, we build on this with an economic framework that has heterogeneous predictions regarding the potential benefit for children of married parents. We propose that the gains due to marriage from a child's perspective depend on a mother's own level of resources, the additional net resources that her partner brings, and the outcome-specific returns to resources. Data from the Panel Study of Income Dynamics are consistent with the heterogeneous predictions of this framework. In terms of high school completion or avoiding poverty at age 25, the so-called marriage premium for children is highest for children of mothers with high school degrees and mothers in their early to mid-20s. For the more advanced outcomes of college completion or high income at age 25, the marriage premium monotonically increases with observed maternal age and education.