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Structural Change and the Rise and Fall of Marital Unions * Alessio Moro University of Cagliari Solmaz Moslehi Monash University Satoshi Tanaka § University of Queensland May 26, 2014 Preliminary and Incomplete Abstract One of the important facts on marriage that has not been emphasized in the literature is the hump-shaped pattern of the prevalence of marriage in the U.S. over the last 100 years. In this paper, we study the mutual relationship between the demographic structure and the industrial structure of the economy. As an empirical contribution of the paper, we establish two facts using cross-country panels; i) the hump-shaped pattern of marriage is observed in the most of the OECD countries, and ii) the manufacturing share in GDP has a significant positive correlation with the prevalence of marriage. Given those observations, we propose a model of the structural change with endogenous household formation. In our model, individuals’ incentives to marry are affected by the underlying structure of the economy, and the home production sector is operated by different types of household with different scales. In addition to the ability of our model to match the pattern of marriage, we show that our model is also able to generate a pattern of the manufacturing and service shares consistent with the observed data, which the standard model of structural change fails to generate. * We thank Nezih Guner and José-Víctor Ríos-Rull for useful discussions and support in pursuing this project. Contact: [email protected]. Contact: [email protected]. § Contact: [email protected]. 1
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Page 1: Structural Change and the Rise and Fall of Marital Unions...One of the important facts on marriage that has not been emphasized in the literature is the hump-shaped pattern of the

Structural Change and the Rise and Fall of Marital Unions∗

Alessio Moro†

University of CagliariSolmaz Moslehi‡

Monash UniversitySatoshi Tanaka§

University of Queensland

May 26, 2014

Preliminary and Incomplete

Abstract

One of the important facts on marriage that has not been emphasized in the literature isthe hump-shaped pattern of the prevalence of marriage in the U.S. over the last 100 years.In this paper, we study the mutual relationship between the demographic structure and theindustrial structure of the economy. As an empirical contribution of the paper, we establishtwo facts using cross-country panels; i) the hump-shaped pattern of marriage is observed in themost of the OECD countries, and ii) the manufacturing share in GDP has a significant positivecorrelation with the prevalence of marriage. Given those observations, we propose a model of thestructural change with endogenous household formation. In our model, individuals’ incentivesto marry are affected by the underlying structure of the economy, and the home productionsector is operated by different types of household with different scales. In addition to the abilityof our model to match the pattern of marriage, we show that our model is also able to generatea pattern of the manufacturing and service shares consistent with the observed data, which thestandard model of structural change fails to generate.

∗We thank Nezih Guner and José-Víctor Ríos-Rull for useful discussions and support in pursuing this project.†Contact: [email protected].‡Contact: [email protected].§Contact: [email protected].

1

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Figure 1: Fraction of the Married and Sector Shares in GDP,United States, 1900 - 2000

1 Introduction

The formation of household has changed dramatically over the last century. It is well documentedin the literature that there has been a significant decline in the fraction of the married in totalpopulation during the second half of the twentieth century.1 Nonetheless, there is another notablefact on marriage that has received little attention in the literature: the pattern of the fraction ofmarried over the last 100 years is hump-shaped (See Figure 1). What are the economic factorsthat can explain the observed hump-shaped pattern of the prevalence of marriage over the lastcentury? This paper puts forth the idea that the rise and then the fall of marital unions over thelast century is connected to the structural transformations of the economy over the same period.We show empirically and quantitatively that labor flows between manufacturing and services aswell as those between market and home-produced services are key in explaining the hump-shapedpattern of the prevalence of marriage over the last 100 years.

As an empirical contribution, we establish two facts by using data from 21 developed anddeveloping countries. First, we document that a hump-shaped pattern of marriage is observed inmost of the OECD countries. The pattern is robust for both men and women even after controllingfor the changing age-structure of the population. Second, we show that the manufacturing sharein GDP has a strong correlation with the fraction of the married. The rise of marriage coincideswith the rise of the manufacturing sector, while the timing of its decline coincides with the levelof income at which the services sector accelerates its growth. These observations suggest the ideathat marriage decisions are tied to the structure of the economy, and their changes are driven bythe structural change.

Motivated by these two empirical facts, we present a parsimonious model of structural changewith endogenous marital decisions that builds on previous work in the literature (Ngai and Pis-sarides, 2008; Ngai and Petrongolo, 2013). In our model, we make two assumptions through whichindividuals’ incentives to marry are affected by the structure of the economy. First, we assume that

1See, among others, Stevenson and Wolfers (2007) and Greenwood and Guner (2008) for empirical evidence.

2

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men have a comparative advantage in the manufacturing sector (Galor and Weil, 1996; Rendall,2010; Ngai and Petrongolo, 2013). With this assumption, an increase in the share of manufactur-ing relative to services widens the gender wage premium, and the gain from marriage through anincrease in specialization in home (females) and market (males). Second, we assume that servicesproduced in the market are substitutes for home-produced goods. With this assumption, whenmarket services become cheaper relative to the home good, the incentives to marry for couplesdiminish because there are less gains for specialization.

Given our assumptions, the rise and the fall of marriages are explained in the following way:During the 1900 to 1950, manufacturing grows relative to the rest of the economy. A by-productof this fact is the increase of labor demand in this sector. As men have a comparative advantageover women in the manufacturing sector (brawn intensive sector), the market value of a man’slabor increases compared to that of women with the raise of manufacturing. At the same time,the growth of the economy makes the fixed costs of marriage relatively cheaper, in turn makingmarriage affordable for more individuals. Thus, the incentive to marry raises with the increasein manufacturing. During the 1950 to 2000, the services sector in the market starts expanding.As a result, the demand for labor in services starts increasing. As women have a comparativeadvantage in services, the market value of their labor starts increasing compared to that of men.At the same time, faster productivity growth in the market services sector relative to home services(Bridgman, 2013) increases the price of home services relative to market ones. As the market serviceis a substitute for home-produced good, the expansion of the service sector reduces the value ofmarriage. Both effects reduce the (overall) value of the marriage.

Allowing for the difference in home productivities between singles and marrieds, we also showan interesting feedback effect from the demographic structure to the structure of the economy.We find that the combination of the change in the fraction of the married and home productionis able to generate the hump-shaped pattern of manufacturing, which the standard model (non-homothetic preference and differential TFP growth) cannot account for. Our results indicate that,as the fraction of the married increases in the economy, the scale of home production gets larger,and therefore the demand for market services declines, which instead generates a rise in the man-ufacturing share. Those results support for the idea that demographics plays an important role toaccount for structural change.

Literature

The process of structural transformation that occurs as income grows is well documented in theliterature and it has been proved that such process has relevant implications for the macroecon-omy. Herrendorf, Rogerson, and Valentinyi (forthcoming) provide a detailed survey of applicationsof structural change. Here we relate mostly to the strand of the literature linking structural trans-formation to the allocation of hours worked (Rogerson, 2008; Prescott, 2004; Rendall, 2010). Togenerate structural change between manufacturing and services we exploit the interaction betweendifferential TFP growth in manufacturing and services and an elasticity of substitution between the

3

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two goods smaller than one, as in Ngai and Pissarides (2007). Also, we argue that to understandthe allocation of market hours it is necessary to model a home sector as in Ngai and Pissarides(2008) and Buera and Kaboski (2012). Possibly, the most related paper is Ngai and Petrongolo(2013), which considers the time allocation between market and home of men and female who areexogenously paired into household. In contrast, in our setting we allow for endogenous marriage,so that in equilibrium only a fraction of individuals marry, being the rest (women and men) single.

Our work is also build on the literature that studies the link between the economic environmentand family structure. Regalia, Ríos-Rull, and Short (2010) is a pioneering work which provides aquantitative theory to explains the increase in the number of single households. Greenwood andGuner (2008) and Greenwood, Guner, Kocharkov, and Santos (2012) account for the changes infamily structure by the progress in home production technology. Salcedo, Schoellman, and Tertilt(2012) attribute the decline in the size of families to the decrease in the price of public goods. Allworks are close to our paper in the spirit. Here, we provide a theory and empirical evidence that thestructure of the economy is an important determinant to the composition of families. Our paper isthe first work which connects the family macro literature to the structural change literature.

2 Cross-Country Evidence

This section presents empirical evidence on the link between structural change and the hump-shapedpattern of the prevalence of marriage.

2.1 Hump-Shaped Pattern of Marriage in 16 OECD Countries

Our population data is from countries in 10-year intervals over the period 1900-2000.2 Specifically,the population data by sex, five year age-group, and marital status (single, married, divorced,and widowed) is collected for; Australia, Belgium, Canada, Denmark, Germany, Finland, France,Italy, Japan, Netherlands, Norway, Spain, Sweden, Switzerland, UK and the U.S. Time series ofthe fraction of the married for men and women at age 15 and above is constructed from the data.In general, we observe that the prevalence of marriage among the old is higher than the young.Therefore, changes in the age structure of population, which have occurred over the twentiethcentury,3 might affect the fraction of the married in total population. To control for changes inthe age structure, we construct new time series by assuming the age structure of the population ineach year is the same as the one in the base year, 2000, while keeping the fraction of the married ineach age group unchanged from the original data.4 Figure 2 displays the fraction of the married in

2For a detailed description of the data sources for each country, see the Appendix B.3The age structure of population has changed due to many reasons. For instance, the majority of countries in our

sample experienced war(s) at the beginning and/or in the middle of the last century. Moreover, baby boom occurredacross many of OECD countries in the mid-twentieth century and life expectancy has improved dramatically duringthe second half of the twentieth century.

4Using a different base year does not change the hump-shaped pattern observed in data. See Appendix C for adetailed discussion on how the adjustment for the shift in the age distribution is done for each country.

4

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.4.5

.6.7

1900 1920 1940 1960 1980 2000

Australia

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Belgium

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Canada

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Denmark

.4.5

.6.7

1900 1920 1940 1960 1980 2000

France

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Italy

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Japan

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Norway

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Netherlands

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Spain

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Sweden

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Switzerland

.4.5

.6.7

1900 1920 1940 1960 1980 2000

USA

.4.5

.6.7

1900 1920 1940 1960 1980 2000

UK

Fra

ctio

n o

f M

arr

ied

Year

Figure 2: Fraction of Married in Total Population Age 15 and Above for 14 OECD Countries,the Raw Data (Blue/Solid Line) and the Age-Adjusted Data (Red/Dashed Line)

total population at age 15 and above for the raw data (blue/solid line) and the age-adjusted data(red/dashed line) for each of the 16 OECD countries in the sample. 5

Figure 2 shows that the fraction of the married rose in the early and mid-twentieth centuryand peaked in 1970 and 1980 for the majority of OECD countries and it has been decreasing overthe ensuing quarter of the century. Also, the pattern is robust for the most of the countries evenafter controlling for the age-structure of the population. For the U.S., the hump-shaped patternfor marital unions peaks in 1960 which is consistent with two previous papers which document thepattern (Schoen, Urton, Woodrow, and Bai, 1985; Greenwood and Guner, 2008). The rise andfall in marital unions in some countries, like France, Italy, Japan, Spain and Switzerland, is lesspronounced than the other countries in the sample.

5Figure 5 and 6 in Appendix A show the time series data for the fraction of the married in total population atage 15 and above for men and women separately. Again the hump-shaped pattern is observed for both series of menand women for the majority of countries in our sample.

5

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−.1

0.1

.2.3

.4A

griculture

Share

7.5 8 8.5 9 9.5 10Log GDP per Capita

Agriculture Share in GDP

.2.3

.4M

anufa

ctu

ring S

hare

7.5 8 8.5 9 9.5 10Log GDP per Capita

Manufacturing Share in GDP

.3.4

.5.6

.7.8

Serv

ice S

hare

7.5 8 8.5 9 9.5 10Log GDP per Capita

Service Share in GDP

.4.5

.6.7

Fra

ction o

f M

arr

ied

7.5 8 8.5 9 9.5 10Log GDP per Capita

Fraction of Married, Age 15+

Figure 3: Agriculture, Manufacturing, Service Shares, and Fraction of Married by Log Income perCapita

(Fixed-effects are controlled for each series.)

2.2 Structural Transformation and Marital Unions in 21 Countries

To study the impact of technological progress and structural transformation on marital unions,next, we add 5 Latin American countries to our sample. Those Latin American countries areArgentina, Brazil, Chili, Colombia, and Mexico.

We follow the approach by Buera and Kaboski (2012) who construct historical time series datafor value added shares of manufacturing and services as well as real GDP per capita (1993 baseyear) over the twentieth century for aforementioned countries in our sample. Specifically, we runseparate regressions for each of the data series (the value added share of manufacturing and, servicesector, and the fraction of married in total population of 15 and above) on a cubic function of logof GDP per capita with country dummy variables. Then, we subtract out the estimated country-fixed effects from the raw data and create new series. The filtered data series for the share ofmanufacturing and services, and the fraction of the married are plotted against the real GDP percapita in Figure 3. In all three panels, the solid lines represent the fitted curves.

It can be seen from the right two panels in Figure 3 that the value added share of manufacturingpeaks around the same level of log of GDP per capita at which the rate of increase in the valueadded share of services starts to increase rapidly. The hump-shaped pattern in manufacturingand the late acceleration of services highlight that growth of manufacturing relative to services is

6

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higher at the lower level of development and then it declines at the higher level of development.6

Interestingly, this pattern of structural transformation coincides with the hump-shaped pattern inthe fraction of married in total population.

Next, we investigate further whether there is a positive correlation between the manufacturingshare and the prevalence of marriage (see Figure 4). We regress the fraction of marrieds on theshare of manufacturing separately for men and women using the cross-country panels, controllingfor agricultural shares, log of GDP per capita, sex ratios, country fixed effects, and year effects.The results of those regression are reported in Table 1 and 2. The results indicate that the share ofmanufacturing has a large and significant effect on the fraction of married. Specifically, 1% increaseof the manufacturing share increases the fraction of married by 0.24% to 0.79% depending on thespecification of the regression.

.4.5

.6.7

Fra

ction o

f M

arr

ied, A

ge 1

5+

.2 .3 .4 .5Manufacturing Share in GDP

Fraction of Married Fitted values

Figure 4: Fraction of Married in Total Population at Age 15 and Abovev.s. Manufacturing Share

(Country fixed effects are controlled in the figure.)

Our cross-country empirical evidence establishes two facts. First, the hump-shaped pattern inthe prevalence of marriage is observed in most of the OECD countries in our sample even aftercontrolling for changes in the age structure of population. Second, the prevalence of marriageexhibits a positive correlation with the ratio of manufacturing to services over the last century.7Motivated by these empirical facts, the next section presents a model that includes three sectors(home production, goods and services) and endogenous marital decisions.

6This fact is well documented in the structural transformation literature; see Herrendorf, Rogerson, and Valentinyi(forthcoming) and references therein.

7Figure 7,and 8 in Appendix A confirm that our results are robust for changes in age-structure.

7

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Table 1: Regression of Fraction of Married Women

Fraction of MarriedWomen 15+ Women 15-49 Women 15+ Women 15-49

Manuf. Share 0.515 0.794 0.240 0.322(0.071)** (0.099)** (0.090)** (0.119)**

Agri. Share 0.025 0.031 -0.011 -0.042(0.123) (0.157) (0.105) (0.125)

Log(GDP per Capita) 0.009 -0.003 -0.014 -0.040(0.015) (0.021) (0.025) (0.033)

Log(Sex Ratio 15-49) 0.172 0.295 0.145 0.231(0.098) (0.138)* (0.090) (0.124)

Constant 0.329 0.357 0.563 0.749(0.161)* (0.218) (0.217)* (0.275)**

Country Fixed Effect Yes Yes Yes YesYear Effect No No Yes YesR2 0.62 0.56 0.72 0.70N 176 176 176 176

* p < 0.05; ** p < 0.01Note: Robust standard errors are in brackets.

Table 2: Regression of Fraction of Marriage Men

Fraction of MarriedMen 15+ Men 15-49 Men 15+ Men 15-49

Manuf. Share 0.554 0.760 0.254 0.399(0.075)** (0.086)** (0.096)** (0.108)**

Agri. Share 0.015 0.019 -0.038 -0.033(0.125) (0.135) (0.102) (0.109)

Log(GDP per Capita) 0.025 -0.003 -0.020 -0.044(0.016) (0.018) (0.025) (0.028)

Log(Sex Ratio 15-49) -0.164 -0.127 -0.209 -0.181(0.100) (0.116) (0.089)* (0.105)

Constant 0.210 0.324 0.618 0.714(0.169) (0.191) (0.213)** (0.237)**

Country Fixed Effect Yes Yes Yes YesYear Effect No No Yes YesR2 0.62 0.59 0.73 0.71N 176 176 176 176

* p < 0.05; ** p < 0.01Note: Robust standard errors are in brackets.

8

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3 The Model

This section presents a model of structural change with endogenous marital decisions.

3.1 Preference

There is a unit mass of men (m) and a unit mass of women (f). In each period there are threetypes of household in this economy (single women, single men and married households) and theyget the period utility by consumption of agriculture, manufacturing and services. Suppose thatmomentary preference of a single woman, u0,f , is given by

u0,f (ca0,f , cm0,f , cs0f ) =

∑i=a,m,s

(ωi) 1σ(ci0,f + ci

)σ−1σ

σσ−1

. (1)

where superscript i = a, m and s denote agriculture, manufacturing and services, hence, (ωa)1/σ ,(ωm)1/σ and (ωs)1/σ are weights attached to agriculture, manufacturing and services in the utilityfunctions which are add up to one and ca, cm and cs are constant subsistence levels. Note that theelasticity parameter is σ and it is the same among the three types of consumptions.8 Preference ofa single man (u0,m) also denoted by (1) once subscript 0, f is replaced by 0,m.

The momentary preference of a married household (u1) is given by:

u1(ca1, cm1 , cs1) + θ =

∑i=a,m,s

(ωi) 1σ

(ci1

1 + χ+ ci

)σ−1σ

σσ−1

+ θ. (2)

where χ is equivalent scale parameter which implies there are economic of scales in householdconsumption, that is the consumption of second member of the household is less expensive thanthe first one. Here, θ represents the love shock which follows the distribution of F (θ).

Agriculture and manufacturing is purchased in the market, while services is an aggregation ofpurchased market services (csm) and home produced (csh) services:

csj =[ψ(csmj )

γ−1γ + (1− ψ)(cshj )

γ−1γ

] γγ−1

where subscript j is equal to 0, f , 0,m and 1 and represents the type of household. Note that γ > 1which implies that home and market services are substitutes.

8It worth noting that σ does not represent the elasticity of substitution between consumption categories since wehave non-homothetic preferences

9

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3.2 Consumer’s Problem

A single woman’s value function is defined as:

Vf = maxca0,f ,c

m0,f ,c

sm0f ,c

sh0,f ,l

sh0,f

[u0,f (ca0,f , cm0,f , cs0,f ) + β(1− δ)

ˆ{(1− af )Vf + af max [Wf (θ), Vf ]} dF (θ)

],

(3)

where β is a discount factor, δ is a mortality rate which is assumed to be same across genders,af is the probability that a woman get a marriage offer from a man and is determined in anequilibrium. A single woman maximizes (3) subject to her budget constraint and home productionwhich respectively are

paca0,f + pmcm0,f + psmcsm0,f = wf(l0,f − lsh0,f

). (4)

csh0,f = Ash0

((φsh

) ηη−1 lsh0,f

)α0

(5)

where l0,f is total time of a single woman and lsh0,f denotes time spents in the home production fora single woman. Here, wf , pa , pm, and psm are female wage rate in market, price of agriculture,manufacturing and market services.

The value function of a single man also denoted by (3) once subscript f is replaced by m.A single man maximizes his value function subject to his budget constrain and home productionconstrain which respectively are:

paca0,m + pmcm0,m + psmcsm0,m = wm(l0,m − lsh0,m

)

csh0,m = Ash0

((1− φsh

) ηη−1 lsh0,m

)α0

where l0,m is total time of a single man and lsh0m denotes time spent in the home production for asingle man.

Married woman’s value function is defined as:

Wf (θ) = maxca1 ,c

m1 ,c

sm1 ,csh1 ,lsh1,f ,l

sh1,m

[u1(ca1, cm1 , cs1, θ) + β(1− δ) {sVf + (1− s)Wf (θ)}] , (6)

where s is the separation rate which satisfies s = {1− (1− λ) (1− δ)} and λ is an exogenous divorcerate. The value function of a married man also denoted by (6) once subscript f is replaced by m.Both married woman and married man maximize their value function subject to budget constraintand home production in a married household which respectively are given by:

paca1 + pmcm1 + psmcsm1 = wf(l1,f − lsh1,f

)+ wm

(l1,m − lsh1,m

). (7)

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csh1 = Ash1

(φsh (lsh1,f) η−1η +

(1− φsh

) (lsh1,m

) η−1η

) ηη−1α1

(8)

where l1,f − lsh1,f and l1,m − lsh1,m are time spent in the market by woman and man in a marriedhousehold, respectively. Here, η represents the elasticity of substitution between female and malelabor inputs in the production of home services in a married household.

3.3 Market Firms

This section consider the supply side of the model with non-homotheticity. There is a representativefirm in each of the three market sectors. Thus, in each of the three sectors technology is

yj = AjLj , j = a,m, sm (9)

where

Lj =[φj(Ljf

) η−1η + (1− φj)

(Ljm

) η−1η

] ηη−1

, (10)

where φa = φm < φsm < φsh, which implies that women have a comparative advantage in producingservices. Here, η denotes the elasticity of substitution between male and female labour.

Firms in the market maximize profits by solving

maxLjf,Ljm

pjAj[φj(Ljf

) η−1η + (1− φj)

(Ljm

) η−1η

] ηη−1

− wmLjm − wfLjf . (11)

Note that home services are produced as in perfectly competitive market sectors. So we canderive implicit prices of home production for the three types of household:

psh1 = wf

Ash1 α1(Lsh1

) η(α1−1)+1η φsh

(Lsh1,f

)− 1η

, (12)

psh0,f = wf

Ash0 α0 (φsh)ηη−1

[(φsh)

ηη−1Lsh0,f

]α0−1 , (13)

psh0,m = wm

Ash0 α0 (1− φsh)ηη−1

[(1− φsh)

ηη−1Lsh0,m

]α0−1 , (14)

Here, psh1 , psh0,f and psh0,m respectively are price of home services in married, single woman andsingle man households and Lsh1 is total labour in production of home services in a married household.

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3.4 Within-Period Problem

Since allocations do not affect intertemporal decisions, we can solve for the momentary utilitiesindependently. Single women’s problem becomes:

U0,f = maxca0,f ,c

m0,f ,c

sm0f ,c

sh0,f ,l

sh0,f

[u0,f (ca0,f , cm0,f , cs0,f )

],

s.t.

paca0,f + pmcm0,f + psmcsm0,f = wf(l0,f − lsh0,f

),

csh0,f = Ash0

((φsh

) ηη−1 lsh0,f

)α0

.

Similarly we can write a single man’s whitin-period problem. Married women and men’s problemalso is given by:

U1,f = U1,m = maxca1 ,c

m1 ,c

sm1 ,csh1 ,lsh1,m,l

sh1,f

[u1(ca1, cm1 , cs1)] ,

s.t.

paca1 + pmcm1 + psmcsm1 = wf(l1,f − lsh1,f

)+ wm

(l1,m − lsh1,m

),

csh1 = Ash1

(φsh (lsh1,f) η−1η +

(1− φsh

) (lsh1,m

) η−1η

) ηη−1α1

.

Next, given these periodic utility functions, the value functions are simplified and marriagesearch is solve

3.5 Solving Marriage Search

This problem is similar to Burdett and Wright (1998) therefore the cut-off values for love for female,θ∗f , and male, θ∗m, can be obtained from the below equations:

θ∗f +(U1,f − U0,f

)µ(θ∗f

) = −πµ′ (θ∗m) , (15)

θ∗m +(U1,m − U0,m

)µ (θ∗m) = −πµ′

(θ∗f

). (16)

where π = β(1−δ)1−β(1−δ)(1−s) and µ′

(θ∗f

)= −

{1− F

(θ∗f

)}. Note that we assume in every period, a

single woman meet a partner with probablity one. Then, the probability she get an offer is

af = 1− F (θ∗m) = −µ′ (θ∗m) . (17)

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Similarly, µ′ (θ∗m) and am can be defined for a single man. If F (θ) is log-concave, the above systemof equations defines a unique set of solutions for

(θ∗f , θ

∗m

).

3.6 Steady-State Distribution

Once we find(θ∗f , θ

∗m

), we can compute the steady-state distribution of single and married. Denote

the distribution of the single as H0 and the distribution of the married as H1.

H0 = (1− δ) {sH1 + (1− afam)H0}+ nb,

H1 = (1− δ) {(1− s)H1 + afamH0} ,

H0 +H1 = 1,

This can be solved for H0, H1, and the fraction of the new-born to the total population, nb and wehave:

H0 = 1− (1− δ) (1− s)1− (1− δ) (1− s) + (1− δ) afam

, (18)

H1 = (1− δ) afam1− (1− δ) (1− s) + (1− δ) afam

. (19)

where nb in the steady state is equal to mortality rate.

3.7 Equilibrium

An equilibrium for this economic is a set of prices{pa, pm, psm, psh1 , p

sh0,f , p

sh0m, wf , wm

}, allocations

for the households{ca1, c

m1 , c

sh1 , c

sm1 , ca0,f , c

m0,f , c

sh0,f , c

sm0,f , c

a0,m, c

m0,m, c

sh0,m, c

sm0,m, l

sh0,f , l

sh0,m, l

sh1,f , l

sh1,m

},

allocations for market firms{Laf , L

am, L

mf , L

mf , L

smf , Lsmf

}, and fraction of single and married in

total in total population and cut-off value for female and male{H0, H1, θ

∗f , θ∗m

}, such that:

1. Given prices, ca0,f , cm0,f , c

sh0,f , c

sm0,f , c

a0,m and lsh0,f solve the problem of the single woman,

ca0,m, cm0,m, c

sh0,m, c

sm0,m and lsh0,m solve the problem of the single man and ca1, cm1 , csh1 , csm1 , lsh1,f

and lsh1,m solve the problem of the married;

2. Given prices, Laf and Lam solve the problem of the agriculture firm, Lmf and Lmm solve theproblem of the manufacturing firm and Lsmf and Lsmm solve the problem of the market servicesfirm;

3. The cut-off values of love for female and male are determined from (15) and (16). Given θ∗fand θ∗m, the fraction of single and married are obtained from (18) and (19);

4. Markets clearLsh1,f = (1−H0)lsh1,f ,

Lsh1,m = (1−H0)lsh1,m,

13

Page 14: Structural Change and the Rise and Fall of Marital Unions...One of the important facts on marriage that has not been emphasized in the literature is the hump-shaped pattern of the

Lsh0,f = H0lsh0,f ,

Lsh0,m = H0lsh0,m,

Laf + Lmf + Lsmf + Lsh0,f + Lsh1,f = H0 l0,f + (1−H0)l1,f = Lf ,

Lam + Lmm + Lsmm + Lsh0,m + Lsh1,m = H0 l0,m + (1−H0)l1,m = Lm,

ya = (1−H0)ca1 +H0ca0,f +H0c

a0,m,

ym = (1−H0)cm1 +H0cm0,f +H0c

m0,m,

ysm = (1−H0)csm1 +H0csm0,f +H0c

sm0,m,

ysh1 = (1−H0)csh1 ,

ysh0,f = H0csh0,f ,

ysh0,m = H0csh0,m.

4 Quantitative Analysis

To be added.

5 Conclusion

To be added

14

Page 15: Structural Change and the Rise and Fall of Marital Unions...One of the important facts on marriage that has not been emphasized in the literature is the hump-shaped pattern of the

References

Bridgman, B. (2013): “Home Productivity,” Working Paper.

Buera, F. J., and J. P. Kaboski (2012): “Scale and the Origins of Structural Change,” Journalof Economic Theory, 147(2), 684–712.

Burdett, K., and R. Wright (1998): “Two-sided search with nontransferable utility,” Reviewof Economic Dynamics, 1(1), 220–245.

Galor, O., and D. N. Weil (1996): “The Gender Gap, Fertility, and Growth,” American Eco-nomic Review, 86(3), 374–87.

Goldin, C., and T. Schultz (1995): “The U-Shaped Female Labor Force Function in EconomicDevelopment and Economic History,” in Investment in Women’s Human Capital and EconomicDevelopment. University of Chicago Press.

Greenwood, J., and N. Guner (2008): “Marriage and Divorce since World War II: Analyzingthe Role of Technological Progress on the Formation of Households,” NBER MacroeconomicsAnnual, 23(1), 231–276.

Greenwood, J., N. Guner, G. Kocharkov, and C. Santos (2012): “Technology and theChanging Family: a Unified Model of Marriage, Divorce, Educational Attainment and MarriedFemale Labor-Force Participation,” NBER Working Paper, (w17735).

Greenwood, J., A. Seshadri, and M. Yorukoglu (2005): “Engines of Liberation,” Review ofEconomic Studies, pp. 109–133.

Herrendorf, B., R. Rogerson, and A. Valentinyi (forthcoming): “Growth and StructuralTransformation,” Handbook of Economic Growth.

Ngai, L. R., and B. Petrongolo (2013): “Gender Gaps and the Rise of the Service Economy,”Working Paper.

Ngai, L. R., and C. A. Pissarides (2007): “Structural Change in a Multisector Model ofGrowth,” The American Economic Review, 97(1), 429–443.

(2008): “Trends in Hours and Economic Growth,” Review of Economic Dynamics, 11(2),239–256.

Olivetti, C. (2013): “The Female Labor Force and Long-Run Development: The AmericanExperience in Comparative Perspective,” NBER Working Paper, (w19131).

Prescott, E. C. (2004): “Why Do Americans Work So Much More Than Europeans?,” FederalReserve Bank of Minneapolis Quarterly Review, 28(1), 2–13.

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Page 16: Structural Change and the Rise and Fall of Marital Unions...One of the important facts on marriage that has not been emphasized in the literature is the hump-shaped pattern of the

Regalia, F., J.-V. Ríos-Rull, and J. Short (2010): “What Accounts for the Increase in theNumber of Single Households?,” Working Paper.

Rendall, M. (2010): “Brain versus Brawn: The Realization of Women’s Comparative Advantage,”Working Paper.

Rogerson, R. (2008): “Structural Transformation and the Deterioration of European Labor Mar-ket Outcomes,” Journal of Political Economy, 116(2), 235–259.

Salcedo, A., T. Schoellman, and M. Tertilt (2012): “Families as Roommates: Changes inUS Household Size from 1850 to 2000,” Quantitative Economics, 3(1), 133–175.

Schoen, R., W. Urton, K. Woodrow, and J. Bai (1985): “Marriage and Divorce in TwentiethCentury American Cohorts,” Demography, 22(1), 101–114.

Stevenson, B., and J. Wolfers (2007): “Marriage and Divorce: Changes and their DrivingForces,” The Journal of Economic Perspectives, 21(2), 27–52.

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Page 17: Structural Change and the Rise and Fall of Marital Unions...One of the important facts on marriage that has not been emphasized in the literature is the hump-shaped pattern of the

Appendix

A. Additional Figures and Tables.4

.5.6

.7

1900 1920 1940 1960 1980 2000

Australia

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Belgium

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Canada

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Denmark

.4.5

.6.7

1900 1920 1940 1960 1980 2000

France

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Italy

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Japan

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Norway

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Netherlands

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Spain

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Sweden

.4.5

.6.7

1900 1920 1940 1960 1980 2000

Switzerland

.4.5

.6.7

1900 1920 1940 1960 1980 2000

USA

.4.5

.6.7

1900 1920 1940 1960 1980 2000

UK

Fra

ctio

n o

f M

arr

ied

Year

Figure 5: Fraction of Married in Total Population at Age 15 and Above,Men (Blue/Solid Line) and Women (Red/Dashed Line)

17

Page 18: Structural Change and the Rise and Fall of Marital Unions...One of the important facts on marriage that has not been emphasized in the literature is the hump-shaped pattern of the

.4.5

.6.7

.8

1900 1920 1940 1960 1980 2000

Australia

.4.5

.6.7

.8

1900 1920 1940 1960 1980 2000

Belgium

.4.5

.6.7

.8

1900 1920 1940 1960 1980 2000

Canada

.4.5

.6.7

.8

1900 1920 1940 1960 1980 2000

Denmark

.4.5

.6.7

.8

1900 1920 1940 1960 1980 2000

France

.4.5

.6.7

.8

1900 1920 1940 1960 1980 2000

Italy

.4.5

.6.7

.8

1900 1920 1940 1960 1980 2000

Japan

.4.5

.6.7

.8

1900 1920 1940 1960 1980 2000

Norway

.4.5

.6.7

.8

1900 1920 1940 1960 1980 2000

Netherlands

.4.5

.6.7

.8

1900 1920 1940 1960 1980 2000

Spain

.4.5

.6.7

.8

1900 1920 1940 1960 1980 2000

Sweden

.4.5

.6.7

.8

1900 1920 1940 1960 1980 2000

Switzerland

.4.5

.6.7

.8

1900 1920 1940 1960 1980 2000

USA

.4.5

.6.7

.8

1900 1920 1940 1960 1980 2000

UK

Fra

ctio

n o

f M

arr

ied

Year

Figure 6: Fraction of Married (Age Structure Adjusted) in Total Population at Age 15 and Above,Men (Blue/Solid Line) and Women (Red/Dashed Line)

18

Page 19: Structural Change and the Rise and Fall of Marital Unions...One of the important facts on marriage that has not been emphasized in the literature is the hump-shaped pattern of the

−.1

0.1

.2.3

.4A

griculture

Share

7.5 8 8.5 9 9.5 10Log GDP per Capita

Agriculture Share in GDP

.2.3

.4M

anufa

ctu

ring S

hare

7.5 8 8.5 9 9.5 10Log GDP per Capita

Manufacturing Share in GDP.3

.4.5

.6.7

.8S

erv

ice S

hare

7.5 8 8.5 9 9.5 10Log GDP per Capita

Service Share in GDP

.5.6

.7F

raction o

f M

arr

ied

7.5 8 8.5 9 9.5 10Log GDP per Capita

Age−Adjusted Fraction of MarriedAge 15+

Figure 7: Agricultural, Manufacturing, Service Shares, and Fraction of Married (Age-Adjusted) byLog Income per Capita

19

Page 20: Structural Change and the Rise and Fall of Marital Unions...One of the important facts on marriage that has not been emphasized in the literature is the hump-shaped pattern of the

.4.5

.6.7

Ag

e−

Ad

juste

d F

ractio

n o

f M

arr

ied

Ag

e 1

5+

.2 .3 .4 .5Manufacturing Share in GDP

Fraction of Married Fitted values

Figure 8: Fraction of Married (Age-Adjusted) in Total Population at Age 15 and Abovev.s. Manufacturing Share

20

Page 21: Structural Change and the Rise and Fall of Marital Unions...One of the important facts on marriage that has not been emphasized in the literature is the hump-shaped pattern of the

B. Data Sources

Data on marital status (single, married, divorced and widowed) by five-year age-groups and sexover the period 1900 to 2000 is collected from the following sources:

Australia

• For 1900, Australian Statistical Yearbook published in 1901 (p.175-179) is used. Census of theCommonwealth of Australia is the source of data for 1910, 1920, 1930, 1940, 1950 and 1960.Censuses published in the following years are use: 1911 (Vol. III - Part IX, p.1078-1081),1921 (Vol. I, Part VIII, p.494-497), 1933 (Vol. II, Part XVIII, p.1118-1119), 1947 (Vol. I,Part X, p.604-605), 1954 (Vol.VIII, Part I, p.20-21). For 1970, data is extracted from Censusof Population and Housing published in 1971 (Bulletin No 3 - Part 9, p.1)

• 1980-2000: UN Database for Marriage and Divorce

Belgium

• Between 1900 and 1970, Annuarie Statistique la Belgique et du Congo Belge (statisticalyearbook of Belgium) is used. Data for 1900-1910 is from the yearbook published in 1914(p. 70-73) and data for 1920 and 1930 are from yearbooks published in1933 (p. 26-27) and1940 (p. 36-37), respectively. For 1950 we use yearbooks published in 1955 (p.46-47) whichreports the data for 1947. For 1960 and 1970, yearbooks published in 1965 (p.69) and 1975(p.33) are used.

• 1980-2000: UN Database for Marriage and divorce Manufaturing

Canada

• For 1910 and 1921, data is extracted from Census of Canada published in 1921 (Vol. II, Table29, p.140-141). For 1930, Census of Canada published in 1931 (Table 12, p. 94-95) is used.

• 1950-2000: UN Database for Marriage and Divorce

Denmark

• For 1900, 1910, 1950, 1960, 1970 and 1980 Statistisk Årbog Danmark (statistical yearbookof Denmark) is used. Yearbooks published in the following years are used: 1901 (Table 6,p.10-11), 1914 (Table 7, p.11), 1954 (Table 10, p.12), 1963-64 (Table 11, p.31), 1970 (Table11, p.42), 1980 (Table 10, p.21) and 1990 (Table 40, p.31).

• For 1920, 1930 and 1940, Folketaellingen I Kongeriget Danmark (Denmark Census) is used.The years of publications respectively are 1921 (Table2, p.22-23), 1930 (Table IIa, p.22-23)and 1940 (Table IIa, p.28-29)

21

Page 22: Structural Change and the Rise and Fall of Marital Unions...One of the important facts on marriage that has not been emphasized in the literature is the hump-shaped pattern of the

• For 2000 we get the data from Danish Statistical Database STATBANK. It is available at:http://www.dst.dk/en/Statistik/statistikbanken.aspx

France

• Between 1900 and 1950, we collect the data from Annuaire Statistique (statistical yearbookof France). Yearbooks published in the following years are use: 1905 (Table 3, p.7), 1914-15(Table 3, p.9), 1927 (Table 5, p.8), 1936 (Table 5, p.9), 1954 (Table 1, p.10-12).

• 1960-2000: UN Database for Marriage and Divorce

Italy

• Between 1900 and 1990, we collect the data from Censimento Generale della Popolazione(Italian Census). Data for 1910 and 1920 is from the yearbook published in 1921 (No.55,p.180-181). For other years Italian census published in the following years are used: 1901(Table 3, p.337), 1931 (Vol.4, Part 2, Table 8, p.66-69), 1936 (Vol.3, Part 1, Appendix Table5, p.114-118), 1951 (Vol.7, Table 20, p.123), 1961 (Vol.6, Table 2, p.120), 1971 (Vol.5, Table2, p.232-233), 1981 ( Vol.5, Table 12, p.191-192) and 1991 ( Vol.1, Table 2.1, p.73-74 ).

• For 2000 we used Italian Census Data accessed through http://dawinci.istat.it/Database

Japan

• For 1920-2000 we collect the data from Japanese Census, Statistics Bureau, Ministry of In-ternal Affairs and Communications.This is available at: http://www.e-stat.go.jp/SG1/estat/eStatTopPortalE.do

Netherlands

• For 1910, 1920 and 1940 we use De Nederlandse Volkstellingen (Dutch Census). Yearbookspublished in the following years are respectively used: 1909 (Table II, p.375-378), 1921 (TableII, p.247-249) and 1947 (Table 1B, p.60-61).

• For 1900 and 1930 we obtained the data for 1899 and 1931 from Statline Database Nether-lands. For 1950 to 2000 we also used Statline Database Netherlands. This database isavailable at: http://statline.cbs.nl/statweb/dome/?TH=3600&LA=nl

Norway

• Between 1900 and 2000, we use Folketellingen I Norge (Statistical yearbook of Norway).Yearbooks published in the following years are use: 1904 (Table 5, p.6-7), 1912 (Table 7,p.82-83), 1926 (Table 8, p.8-9), 1935 (Table 7, p.6-7), 1946 (Table 12, p.14), 1956 (Table 10,p.14), 1963 (Table 10, p.14), 1973 (Table 9, p.10), 1982 (Table 11, p.14), 1992 (Table 19.p.45) and 2000 (Table 63, p.79)

22

Page 23: Structural Change and the Rise and Fall of Marital Unions...One of the important facts on marriage that has not been emphasized in the literature is the hump-shaped pattern of the

Spain

• Between 1900 and 1930, data is extracted from Census of Spain published in the followingyears is used: 1900 (Vol.3, p.296-297), 1910 (Vol.3, p. 402-403), 1920 (Vol.3, p.276-277) and1930 (Vol.2, p.4-5)

• 1950-2000: UN Database for Marriage and Divorce

Sweden

• Between 1900 and 1990, we use Population changes during 250 years: Historical statistics forSweden. The reference to the book is the following: Sweden, Statistics. (1999): "Befolkning-sutvecklingen under 250 år." Historisk statistik för Sverige, p. 30-37.

• For 2000, Data for marital status extracted from the Swedish Statistical Database accessvia http://www.scb.se/en_/Finding-statistics/Statistical-Database/. See Statisti-cal Yearbook of Sweden in 2002 (Table 62, p.63)

Switzerland

• Between 1900 and 1990, we use Historical Statistics of Switzerland (Table B10A, p.118 andTable B11A, p.120). The reference of this book is the following: Siegenthaler, H. (1996)"Historische Statistik der Schweiz", edited by H, Ritzmann-Blickenstorfer.

• For 2000 we use UN Database for Marriage and Divorce

United Kingdom

• For 1910, 1920, 1930 and 1980 we use Census published in 1911 (England and Wales only),1921 (England and Wales only), 1931 (England and Wales only) and 1981, respectively.This is available at: http://www.statistics.gov.uk/hub/index.html

• For 1951 (England and Wales only), 1961 (England and Wales only), 1971 (England andWales only), 1991 and 2000, we use UN Database for Marriage and Divorce.

United States

• Between 1900 and 2000, is extracted from IPUMS Census.This is available at: https://usa.ipums.org/usa/

23

Page 24: Structural Change and the Rise and Fall of Marital Unions...One of the important facts on marriage that has not been emphasized in the literature is the hump-shaped pattern of the

C. Adjustment in Population Structure

To do the age adjustment we consider a typical method that is used by demographers. Suppose forcountry i, data on marital status is collected by J age groups for the entire time period. Let, xit,xijt , and mij

t respectively represent the total population in the country i, total population in thej-th age group and number of married in that age group at time t. The fraction of married in thetotal population in the country i at time t is obtained from:

F it =J∑j=1

mijt

xijt

xijtxit

Hence, the age adjusted measure for the baseline year (for example 2000) can be obtained from:

F it =J∑j=1

mijt

xijt

xij2000xi2000

In other words, we keep the age composition of the population unchanged (age composition inthe base year) while the fraction married for each age group gets its own value from data.

24


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