Review of Previous Research on Early Nonmarital Childbearing

We also consider a large set of potentially confounding state- level factors, and con- fi rm that our fi ndings are not driven by these alternative explanations. For example, we directly test the role of income inequality against absolute income levels, poverty concentration rates, minority concentration rates, as well as other potentially important environmental factors such as social capital measures, religious composition, or politi- cal climate. Though we could never completely rule out the existence of an omitted factor, the robustness of the relationship is striking. 7 Our scholarly contribution is twofold. First, we present empirical evidence sup- porting the role of income inequality in driving rates of early nonmarital childbear- ing among those at the bottom of the income distribution. Our estimates suggest that inequality can explain a sizable share of the variation in teen childbearing rates across states. To date, no other explanation can come close to explaining as much of the geo- graphic variation. 8 Second, we believe our proposed economic model of young adult decision- making in the face of short- versus long- term payoffs constitutes an impor- tant contribution to the literature in economics that considers adolescent behaviors such as juvenile crime, teen childbearing, and high school noncompletion. In our con- ceptualization, such so- called “risky behaviors” might be more appropriately consid- ered “drop out” behaviors, and our model suggests that adolescents will be more likely to choose to drop out of the mainstream climb to socioeconomic success when they view their chances of success as suffi ciently low. Though this paper is focused entirely on early nonmarital childbearing, we believe our model is applicable to a number of other contexts that involve current benefi ts and future economic costs.

II. Review of Previous Research on Early Nonmarital Childbearing

The standard economics model of childbearing considers an individ- ual who maximizes utility over children and other consumption subject to a budget constraint cf. Becker and Lewis 1973. Preferences are assumed to be given, and explanations have focused on differences in constraints, often generated by particular policies and institutions. The political scientist Charles Murray 1986 wrote in his book, Losing Ground, that the welfare system provided incentives for couples to have a child outside of marriage by reducing both the fi nancial rewards of marriage and the fi nancial costs of out- of- wedlock childbearing. This hypothesis became politically popular among conservatives and helped usher in an era of welfare reform. It also 7. This stands in contrast to the observed correlation between aggregate income inequality and mortality, which has been shown to be fragile. For example, Deaton and Lubotsky 2003 fi nd that controlling for the proportion black negates the positive relationship between state and MSA level income inequality and mortal- ity. Those authors refer to earlier work by Mellor and Milyo 2001 that uses Census data to show that the correlation is likely spurious. They also describe a set of papers that fail to fi nd a robust relationship between income inequality and mortality using individual level data, including Fiscella and Franks 1997 and Daly, Duncan, Kaplan, and Lynch 1998. 8. The question of what drives trends is also very important, but it is a suffi ciently different question with a suffi ciently different set of potential explanatory factors that we do not include a detailed examination of that question in this paper. This is something we have considered in other work. Furthermore, the recent decline of nearly one- third in the national teen childbearing rate, which has gained so much attention, is a mere fraction of the long- standing geographic variation. spawned a vast empirical literature in economics investigating the issue. Moffi tt 1998 and 2003 provides an overview of the large literature on the topic, concluding that more generous welfare benefi ts likely have only a modest positive effect on rates of nonmarital childbearing. With regard to the variation across countries, the lower rate of teen childbearing in Europe with its much more generous welfare system provides a prima facie case against the hypothesis that social support is largely to blame for high rates of teen childbearing in the United States. Economists have also examined a host of other policy and institutional factors rel- evant to the costs of avoiding or not avoiding a nonmarital or teen birth. A highly incomplete list of such studies includes previous work that we have conducted else- where on the effect of various policies and environmental conditions, such as restric- tive abortion policies Levine, Trainor, and Zimmerman 1996; Levine 2003; wel- fare reform Kearney 2004; labor market conditions Levine 2001 and access to affordable contraception Kearney and Levine 2009a. These empirical studies have generally found that changes in such “prices” do have impacts on teen and nonmarital childbearing, but individually these factors can account for only very small shares of the total variation in nonmarital childbearing. 9 Other social scientists have suggested that teen childbearing is attributable to teens’ stage of cognitive development, arguing that they are not quite ready to make the types of decisions that would prevent a pregnancy for example, Brooks- Gunn and Furst- enberg 1989; Hardy and Zabin 1991; Brooks- Gunn and Paikoff 1997. Behavioral economists O’Donohue and Rabin 1999 suggest that teens are “hyperbolic discount- ers,” who place disproportionate weight on present happiness as compared to future well- being. While limited decision- making capacity surely is an issue for some set of teens, these claims have an element of universality to them that cannot begin to explain the striking differences in rates of early nonmarital childbearing across socio- economic groups, over time, or across states or countries. Another line of research considers the relationship between background disadvan- tage and rates of early childbearing cf. Duncan and Hoffman 1990; An, Haveman, and Wolfe 1993; Lundberg and Plotnick 1995; and Duncan et al. 1998. It is well known that growing up in disadvantaged circumstances, such as in poverty or to a single mother, is associated with much higher rates of early childbearing. In a pre- vious examination of cohort rates of early childbearing, we fi nd that the proportion of a female cohort born economically disadvantaged—as captured by being born to a teen mother, a single mother, or to a mother with a low level of education—is tightly linked to the subsequent rate of early childbearing in that cohort Kearney and Levine 2009b. But, strikingly, we fi nd that state and year of birth fi xed effects capture much of the variation. We interpret that fi nding as suggestive of the importance of some “cultural” dimension, otherwise unmodeled in that framework. In some sense this could be considered the launching point for this current research. Although economists have been contributing to discussions of early nonmarital 9. Akerlof, Yellen, and Katz 1996 propose a “technology shock” hypothesis for the rise in nonmarital childbearing in the United States in the later 20 th century. They relate the erosion of the custom of “shotgun marriage”—the practice of getting married between conception and birth—to the legalization of abortion and the increased availability of contraception to unmarried women in the United States. This is intriguing in terms of explaining the time trend in nonmarital childbearing, but it can’t explain geographic variation since the shock was experienced eventually nationally. childbearing for several decades, the fi rst contributors to the discussion were other so- cial scientists. Their work pursued a parallel, rarely if ever intersecting track. Daniel Patrick Moynihan’s 1965 report fi rst drew attention to the issue of nonmarital child- bearing among black families in the United States, when the rate was one in three. 10 At about the same time, the social theories of the psychologist Clark 1965 and the an- thropologist Lewis 1969—who developed the theory of the “Culture of Poverty”— were met with controversy. Lewis 1969 wrote the following: “The culture of poverty is both an adaptation and a reaction of the poor to their marginal position in a class- stratifi ed, highly individuated, capitalistic society. It represents an effort to cope with the feelings of hopelessness and despair that develop from the realization of the im- probability of achieving success in terms of the values and goals of the larger soci- ety . . . Women often turn down offers of marriage because they feel that it ties them down to men who are immature, punishing, and generally unreliable” pp. 189–90. This lack of opportunity was observed explicitly by Clark 1965, who wrote: In the ghetto, the meaning of the illegitimate child is not ultimate disgrace. There is not the demand for abortion or for surrender of the child that one fi nds in more privileged communities. In the middle class, the disgrace of illegitimacy is tied to personal and family aspirations. In lower- class families, on the other hand, the girl loses only some of her already limited options by having an illegitimate child; she is not going to make a “better marriage” or improve her economic and social status either way. On the contrary, a child is a symbol of the fact that she is a woman, and she may gain from having something of her own. Nor is the boy who fathers an illegitimate child going to lose, for where is he going? The path to any higher status seems closed to him in any case. p. 72 The sociologist Wilson 1987 revived serious scholarship on the topic with his book The Truly Disadvantaged. The distinction between Wilson and Clark is largely the focus on the lack of jobs itself in Wilson, not the social attitude that results from the lack of jobs. Either way, the lack of opportunity is what is driving the childbearing outcomes in both viewpoints, as described in the following excerpt: Thus, in a neighborhood with a paucity of regularly employed families and with the overwhelming majority of families having spells of long- term joblessness, people experience a social isolation that excludes them from the job network system that permeates other neighborhoods and that is so important in learning about or being recommended for jobs that become available in various parts of the city . . . Moreover, unlike the situation in earlier years, girls who become pregnant out of wedlock invariably give birth out of wedlock because of a shrink- ing pool of marriageable, that is, employed black men. p. 57 The relevant environmental factor for women in this argument is the weak marriage market that is attributable to the lack of jobs for men in the inner city. Wilson is clear to point out that his focus is on “social isolation” and not the “culture of poverty.” 10. Moynihan 1965 argued that the deterioration of the nuclear family, and the rise of the female- headed households, was hindering the economic progress of blacks in the United States. As a policy matter, he argued that it was crucial to improve the job prospects of black men in order to keep them engaged in the family and community as father fi gures and thereby curb the steady increase in rates of out- of- wedlock childbearing and divorce that was contributing to increased rates of poverty among black communities. More recently, Edin and Kefalas 2005 contributed an infl uential ethnographic account of nonmarital childbearing among poor women. They make the following observation: “. . . the extreme loneliness, the struggles with parents and peers, the wild behavior, the depression and despair, the school failure, the drugs, and the general sense that life has spun completely out of control. Into this void comes a pregnancy and then a baby, bringing the purpose, the validation, the companionship, and the or- der that young women feel have been so sorely lacking. In some profound sense, these young women believe a baby has the power to solve everything” p. 10. Our reading of these seminal and infl uential works is that they fi nd common ground in the notion that growing up in an environment where there is little chance of social and economic advancement leads young women to bear children outside of marriage. These women perceive that they have so little chance for success in life that they see no reason to postpone having a child and may even benefi t from having one, regardless of marital status. 11

III. Empirical Framework