Single and Cohabiting Parents and Poverty
Abstract and Keywords
This article examines the interrelationships among poverty rates, inequality, and nonmarital family structures, focusing on households with a never-married parent, usually the mother, or with cohabiting parents. It first considers marriage and fertility patterns around the world and how these patterns exhibit characteristics of the so-called second demographic transition in which marriage and fertility have become increasingly disconnected. It then discusses the reasons why nonmarital families tend to be poorer than marital families and also why the correlation between poverty and nonmarital family structures does not causally explain between- or within-country variation in poverty rates. It also describes some methods for addressing high poverty rates among nonmarital household structures, arguing that policies other than marriage promotion would be far more effective at reducing poverty for nonmarital households. The article concludes with an assessment of some implications of nonmarital fertility for economic inequality.
The last century has witnessed profound changes in how households are formed and maintained. Around the globe, family sizes have decreased as fertility rates have dropped; fewer people are marrying, and when, they do so, they marry at later ages; and divorced households, in many countries, are now common. Little doubt exists that, at the beginning of the twenty-first century, the global familial landscape looks quite different than it did 100 years ago.
Perhaps no change has been as far-reaching as the decoupling of marriage from fertility. This separation can take many forms: married, childless unions; same-sex couples who adopt children; or the use of surrogates and other techniques to raise children with no biological relationship to the parents. But arguably the most common manifestation of this decoupling is the children who are born and raised outside of a state-recognized marital union. A key indicator of this decoupling is the percentage of children born out of wedlock (known as the nonmarital fertility ratio, or the NMFR). The NMFR has risen dramatically in the past few decades, and a recent report on marriage and fertility patterns in 31 diverse countries found that children born out of wedlock now constitute a sizeable fraction of births. Across the 31 countries, the NMFR averaged more than 30 percent, with particularly high percentages found in Western Europe (Sweden’s NMFR, 54 percent) and Latin America (Columbia’s NMFR, 85 percent) (Child Trends 2013).
The rise of the NMFR, and the emergence of two other family structures that highlight the separation of marriage from fertility—never married mothers residing apart from the biological father, and romantically involved cohabiting couples raising children together—has become a matter of public and policy concern because of the high correlation between these types of nonmarital family units and poverty. For many countries, childhood poverty is disproportionately concentrated among one parent and cohabiting households (Heuveline and Weinshenker 2008; Gornick and Jäntti 2012). A simple comparison of poverty rates makes this point clear. In Brazil, the household (p. 418) poverty rate for two-parent homes with children was 25 percent; for single-parent households, it was 35 percent. In Taiwan, the disparity was even greater: 5 percent versus 21 percent.1 Even by U.S. standards, which tend to have relatively high-poverty rates compared with the rest of the industrialized world, the difference in poverty rates was striking: 11.8 percent for all households, and 31 percent for single-parent households (DeNavas-Walt, Proctor, and Smith 2012).
The strong correlation between poverty rates and nonmarital family structures—which, in this chapter, refer to children who live with a never-married parent, usually the mother, or with cohabiting parents—is not surprising, given that married parents tend to have many sociodemographic advantages (e.g., higher earnings, more education) than single or cohabiting parents (Heuveline and Weinshenker 2008; Perelli-Harris et al. 2010). But, as the hoary social science cliché indicates, correlation is not causation. Nonmarital family structure, by itself, is not the primary driver of either a country or an individual’s poverty rate, nor does it explain between-country variation in poverty levels. Many other factors, including employment practices and tax and transfer programs, explain far more variance in both country- and individual-level poverty rates (Rainwater and Smeeding 2003; Gornick and Jäntti 2010; Gornick and Jäntti 2012).
This is not to say, however, that nonmarital family structures are economically benign. They can have indirect economic consequences through their association with poverty: children who grow up in poor households are more likely to be poor as adults, have weaker labor force attachments, and are less likely to marry as adults (Duncan et al. 1998; Ribar 2004; Bradshaw, Hoelscher, and Richardson 2007). These cross-generational effects suggest that, at least in the American context, the rise of nonmarital family structures has contributed to economic inequality (McLanahan and Percheski 2008).
In what follows, I address the association between nonmarital family structures, poverty, and inequality. I begin by briefly describing marriage and fertility patterns around the world, and how these patterns exhibit characteristics of the so-called second demographic transition in which marriage and fertility have become increasingly disconnected. I then explain why nonmarital families tend to be poorer than marital families, but why the correlation between poverty and nonmarital family structures does not causally explain between- or within-country variation in poverty rates. I discuss some methods for addressing high poverty rates among nonmarital household structures, and argue that policies other than marriage promotion would be far more effective at reducing poverty for nonmarital households. I conclude by briefly discussing some implications of nonmarital fertility for economic inequality.2
The Second Demographic Transition
Most countries of the world now exhibit at least some elements of the so-called second demographic transition (Lesthaeghe 2010). The first demographic transition (p. 419) was the decline of mortality and fertility that began in the early nineteenth century. The second demographic transition, emerging in the early nineteenth century and accelerating into the twentieth, is characterized by the separation of fertility from marriage and the emergence of other household types besides the conventional two parent married household (van de Kaa 1987; Lesthaeghe and Johan 1988). The second demographic transition has five key components: decreases in fertility, increases in cohabitation, a rise in the age at first marriage, increases in divorce, and increases in nonmarital fertility. Societies that have fully entered into the second demographic transition have large proportions of children being raised in nonmarital households and have loosened the once-tight connection between marriage and fertility (Lesthaeghe 1995).
Though the second demographic transition was first identified in Western Europe, it now characterizes most industrialized and emerging economies, including the United States; Canada; Mexico; Australia; New Zealand; East and Southeast Asia; Central, Eastern, and Southern Europe; Russia; and Latin America (Sobotka 2008; Lesthaeghe 2010; Perelli-Harris and Gerber 2011; Cherlin 2012). All of these regions and countries have seen sharp drops in fertility, with many below replacement levels (the level of fertility needed to maintain a constant population), an increasing age at first marriage, and an increase in divorce. Most areas have also seen a dramatic rise in nonmarital fertility and births within cohabiting relationships.
Even countries where not all the elements of the second demographic transition are present have nevertheless seen some changes in family structure that are consistent with the second demographic transition. For example, North Africa and the Middle East are still characterized by the absence of cohabitation, near universal marriage, and very few out-of-wedlock births. Nevertheless, both regions have seen a decline in fertility and a postponement of age at first marriage (Cherlin 2012; Engelen and Puschmann 2011). Similarly, in China and Japan, nonmarital fertility is relatively rare, but both countries have seen a dramatic drop in fertility rates, a postponement of age at first marriage, and an increased rate of divorce (Morgan, Zhigang, and Hayford 2009; Wang and Zhou 2010).
Only a handful of countries have family formation patterns that are inconsistent with the second demographic transition. India has had a drop in fertility, but marriage rates are quite high, most people marry at quite young ages, and nonmarital fertility is rare (Dommaraju 2011). Sub-Saharan Africa is one of the few regions of the world that has not had a drop in fertility; it also has very high rates of marriage and very little divorce (Conley, McCord, and Sachs 2007).
These few exceptions notwithstanding, the world is generally moving toward family formation patterns consistent with the second demographic transition. The next sections of this chapter discuss the implications of two of these factors—the decrease in fertility, and the increase in single-parent homes as manifested through a rise in nonmarital births and cohabiting parents—for poverty and economic well-being. (p. 420)
Separation of Fertility from Marriage
The Rise of Nonmarital Births
Perhaps no indicator best represents the separation of marriage from fertility then the percentage of births born out of wedlock (as mentioned, known as the nonmarital fertility ratio, or the NMFR). In many countries, it is commonplace for a child to be born to unmarried parents; in a handful of countries, particularly those in South America and Northern Europe, it is the norm. Figure 18.1 presents the NMFR for 31 countries.
The NMFR ranged from a low of 1 percent (Japan) to a high of 85 percent (Columbia). Most countries had double-digit NMFRs, and in 18 of the 31 countries examined, at least one-third of all children were born out of wedlock. The NMFR comprised the majority of births in the four South American countries (Bolivia, Columbia, Peru, and Chili), and in Mexico, Sweden, and France.
What is most notable about the NMFR is how fast it has risen. Figure 18.2 compares the proportion of births born out of wedlock for select European countries, the United States, and Canada between 1980 and 2011.3
As Figure 18.2 makes clear, the past 30 years have seen a dramatic increase in the NMFR. With the exception of countries that already had a high NMFR in 1980 (e.g., Iceland, Sweden, Denmark), countries have seen their NMFR at least double, if not triple or quadruple, in the past 30 years. The biggest jump occurred in the Netherlands, (p. 421) where the NMFR increased more than 11 times between 1980 and 2011 (from 4 to 45 percent). Large increases were also seen in Spain (from 4 to 34 percent) and France (5 to 55 percent).
This dramatic rise in nonmarital births has stimulated numerous debates about the consequences of single-parent households for poverty (though not all nonmarital births are born to single parents, a point discussed in more detail later). Many policymakers and politicians, particularly in the American context, have pointed to the rise of single-parent households as a primary reason for high poverty rates among children (Amato and Maynard 2007; Rector 2010).
It is true that, on an individual level, single-parent status is one of the most important correlates with poverty. In most places around the globe, children living with one parent have higher poverty rates than children living with two parents, particularly if the family is headed by a woman (Bradbury and Jäntti 1999; Beaujot and Liu 2002; Rainwater and Smeeding 2003; Chen and Corak 2008; Heuveline and Weinshenker 2008). A cross-national study indicated that, on average, single mothers are estimated to be 2.7 times more likely to be poor than other women (Brady and Burroway 2012).
The correlational evidence of the association between poverty and single-parent households is compelling. Gornick and Jäntti (2012) using data from the Luxembourg Income Study, which collects economic and demographic data across industrialized and emerging economics, found that mother-only households have considerably higher poverty rates than two-parent households (see Figure 18.3). They defined poverty as households having market income (e.g., income from earnings, pensions, and cash property) that is below 50 percent of the median household income for that country. (p. 422)
As the Figure 18.3 illustrates, poverty rates for mother-headed households are extremely high, ranging from 81 percent (Germany) to 47 percent (Denmark). Father-only households (results not shown) have slightly lower poverty rates than mother-only households but are still more likely to be poor than two-parent households. Disparities between mother-headed households and two-parent households were quite pronounced and existed across all regions represented in this graph: Northern Europe, Australia, North America, South America, and the former Soviet Republics.
However, despite the correlational associations, most researchers believe that single-parent homes do not cause an increase in poverty levels, either on an individual or country level. This point is illustrated in Figure 18.4, which plots the American NMFR against overall poverty rate and child poverty rates from 1980 to 2011 (here, poverty rate refers to the official poverty threshold as defined by the American government).
If the NMFR had a causal effect on poverty rates, then one would expect the poverty rates to rise with the NMFR. However, as the figure indicates, very little covariance exists between the NMFR and poverty rates. Between 1980 and 2011, the American NMFR rose steadily, while poverty rates oscillated (around 14 percent for the overall rate and 20 percent for the child poverty rate). A far more important determinant of U.S. poverty rates was the strength of the U.S. economy, with increases in the poverty rate corresponding to the recessions of early 1980s, early 1990s, early 2000s, and late 2000s.
Though this figure is meant to be illustrative only, it does demonstrate what has been found across industrialized countries: a rise in out-of-wedlock fertility, with its accompanying rise in single-parent families, does not directly translate into increased poverty or a weakened economy (Rainwater and Smeeding 2003). Moreover, the relative prevalence of single-parent families does not explain variation in poverty rates across countries; the relatively high poverty rate of the United (p. 423) States, for example, cannot be explained because the United States has more out-of-wedlock births than its European peers (Gornick and Jäntti 2010, 2012). Instead, most of the variance in poverty rates between the United States and its European peers can be accounted for by employment and social safety net policies (a point discussed in more detail later). Put succinctly, out-of-wedlock births and the proportion of single-parent homes play very little role in explaining within or between country variation in poverty rates (Rainwater and Smeeding 2003).
Another piece of evidence arguing against the causal effect of single-parent homes on poverty rates is demonstrated by the lack of correlation between nonmarital birth and poverty rates in developing countries. India, for example, has very low rates of nonmarital fertility (less than 1 percent in 2005, the last year for which numbers are available) but has extremely high poverty rates (33 percent of its population living on less than $1.25 a day). Similar points can be made about countries in sub-Saharan Africa, such as Rwanda, Angola, or Botswana. These countries have very high poverty rates, yet almost no out-of-wedlock births, and few would argue that their high poverty rates are caused by nonmarital fertility.
Of course, it would be surprising if any one factor was universally responsible for poverty rates around the globe or within any given country. And little doubt exists that the association between single-parent households and lack of economic resources for the majority of countries is quite robust. But the evidence suggests that though single parent households are a reliable marker for poverty, particularly for children, they do not, by themselves, cause its levels to rise.
Births within Cohabiting Unions
The rise in the NMFR can also be seen as a marker for another indication of the decoupling of marriage from fertility: the increase in the proportion of births born to (p. 424) cohabiting parents.4 Though cohabitation can be defined in various ways, here I refer to two opposite sex romantically involved adults who share living quarters. Cohabiting parents account for more than 50 percent of all first births in Norway and France and at least a third of all first births in Austria, the UK, and the Netherlands (Perelli-Harris et al. 2010). In the United States, the proportion of births to cohabiting parents is about 20 percent (Wildsmith, Steward-Streng, and Manlove 2011), similar to Russia’s 17 percent (Perelli-Harris and Gerber 2011). This rise in cohabiting parents has largely occurred over the past 30 years, which has seen a three- to four-fold increase in the proportion of births born to cohabiting parents (Kennedy and Bumpass 2008; Perelli-Harris et al. 2012).
The associations of cohabitating families with poverty and economic well-being are similar to those discussed earlier: strongly correlational, but not necessarily causal. Trends in cohabiting births do not correlate well with trends in poverty (as an example, cohabitating births could be substituted for the NMFR in Figure 18.3, and the figure would look remarkably unchanged). Heuveline and Weinshenker (2008), in one of the few studies to examine aggregate impacts of cohabitation on economic well-being internationally, found that the proportion of children living with cohabiting parents did not have a strong association on a country’s level of poverty, nor did it explain variation in poverty rates across countries.
Like single-parent households, though, cohabiting parent households are more likely to be poor than married-parent households, as they have higher poverty rates and lower household incomes (Lichter, Qian, and Crowley 2005; Manning and Brown 2006; Heuveline and Weinshenker 2008). Across 11 North American and European countries, cohabiting parents had an average poverty rate of 13 percent, whereas married parents had a poverty rate of 8 percent.5 The difference varied greatly by country, though: Sweden’s poverty rate was the same for married and cohabiting households (2.3 percent), whereas the United States had much higher rates for cohabiting versus married families (30 percent vs. 14 percent) (Heuveline and Weinshenker 2008). Cohabiting parents also fared better economically than single-parent households. Nevertheless, evidence consistently indicates that married and cohabiting households are not economically equivalent, and that a two-parent household by itself does not necessarily shield children from economic risk.
Why Nonmarital Families Are Poor
If nonmarital family structures do not causally impact poverty rates, why, then, are they so strongly associated with high levels of poverty? Most of the reason can be explained by who forms nonmarital family structures, and how they compare, demographically, to those in married-parent families. Married parents, relative to single or cohabiting parents, have completed more education, come from more economically advantaged (p. 425) backgrounds, have higher levels of physical and mental health, wait longer to have children, and make different behavioral choices (Carlson, McLanahan, and England 2004; Heuveline and Weinshenker 2008; Kalil and Ryan 2010; Perelli-Harris et al. 2012). All of these advantages likely contribute to differences in levels of economic resources. Note, however, that these demographic advantages stem from who selects into marriage, rather than a benefit of marriage per se.
Nevertheless, the economic impact of these differences can be large. As one example consider that single and cohabiting parents have completed less education than married parents, a difference which has been found in the United States (Kalil and Ryan 2010), Canada (Kerr, Moyser and Beaujot 2006), Europe (Perelli-Harris et al. 2010), and Russia (Perelli-Harris and Gerber 2011). A large-scale American birth-cohort study found that among married mothers, 18 percent did not have a high school diploma, compared to 41 percent of cohabiting mothers and 49 percent of single mothers. The same study indicated that 36 percent of married mothers had at least a bachelor’s degree, as compared to 2 percent of cohabiting and single mothers (Kalil and Ryan 2010). Education in turn directly affects wages. In 2011, the median earnings for an American woman without a high school diploma was $15,000; for a woman with at least a bachelor’s degree, it was $45,000 (U.S. Census Bureau 2012). Over the course of her lifetime, a woman with a BA will earn $1.2 million more than a woman who is a high school dropout. With these types of economic advantages, it is easy to see why married families are less likely to be poor than mother-only households.
Higher levels of economic resources found among married parents may also, to a lesser extent, stem from advantages that accrue to marriage itself. There are several reasons why marriage might be economically beneficial. First, married men earn more money than unmarried men, as found in the United States, Germany, and Britain (Ginther and Zavodny 2001; Bardasi and Taylor 2008; Pollmann-Schult 2011). American married fathers earn more money than American single or cohabiting fathers (Glauber 2008). Estimates of the U.S. marriage premium range between 3 and 10 percent (Hersch and Stratton 2000; Lundberg and Rose 2000; Killewald 2013). Marriage premiums have been found for white, Hispanic, and black men (Glauber 2008; Hodges and Budig 2010). Part of this marriage premium likely occurs because of selection: married men bring higher human capital to the marketplace and are able to command higher wages. But part of this marital advantage also stems from married fathers ability to rely on a married partner to support them in their work effort. They benefit from either a stay-at-home spouse who addresses domestic chores or a spouse who works but can share in the household and child-rearing tasks (Lundberg and Rose 2000). Theoretically, cohabiting fathers should also enjoy the same wage premium, but cohabiting relationships may not be as effective at promoting workforce attachment (Killewald 2013).
A second economic advantage for married-parent households is that they can take advantage of economies of scale (Thomas and Sawhill 2005). When an adult joins a family, many costs remained unchanged (e.g., mortgage, rent, utilities, etc.), (p. 426) with the added advantage that the new adult can contribute economically. In a one-parent household, all the fixed costs of maintaining a household must be borne by one person. These costs can be offset if the single parent has other adults living in the household, but research suggests that coresident adults are more likely to make in-kind, rather than monetary, contributions (Sarkisian and Gerstel 2004). Though economies of scale should theoretically be possible for cohabiting couples, studies in the United States, Sweden, and Norway (Heimdal and Houseknecht 2003; Lyngstad, Noack, and Tufte 2011), indicate that cohabiting couples do not pool resources to the same extent as do married couples, which diminishes their ability to take advantage of economies of scale.
Marriage likely increases incomes in another way: it facilitates the buildup of wealth (Zagorsky 2005; Vespa and Painter 2011). Married parents are able to take advantage of higher earnings and economies of scale and channel that money into assets and savings (Wilmoth and Koso 2004). Moreover, marriages are more stable than other types of unions (Osborne and McLanahan 2007; Wu and Musick 2008), and their durability encourages long-term financial planning and investment (Waite and Gallagher 2000).
Two other factors explain the marriage advantage, specifically for single-parent households relative to two-parent unions. Single-parent families may be less able to manage the twin tasks of breadwinning and child-rearing (McLanahan and Sandefur 1994). Single parents must provide both economic and emotional resources for their children—having to provide both can compromise their ability to provide either (Thomson, Hanson, and McLanahan 1994). Without the presence of another adult to aid in domestic work, single parents can find it difficult to maintain a strong attachment to the labor force.
A final factor explaining higher poverty rates is specific to single mothers: in addition to facing a human capital gap, they also face a gender wage gap. Though this gap has decreased over time, it is endemic to most industrialized countries (Weichselbaumer and Winter-Ebmer 2005). A recent OECD report indicates that the gap (measured as the percent of male wages earned by women) ranges from 20 percent (Australia, Hungary, Italy) to 50 percent (Canada and Japan) (Polachek and Xiang 2009). The gender wage gap is determined by many factors: women tend to select lower paying occupations, for example, and may accumulate less experience in a particular field. Nevertheless, part of the gender gap appears to result from wage discrimination (Burda, Hamermesh, and Weil 2012).
To summarize, most of the economic advantages of marriage stem from the characteristics of those who marry rather than marriage per se, and positive selection into marriage accounts for most of its economic benefits (Chapple 2009; Thomson and McLanahan 2012). Nevertheless, it is also appears that marriage has a small, yet positive, effect on a family’s economic well-being (Ribar 2004). In general, unmarried parents have lower levels of human capital and cannot take advantage of economies of scale. They also do not benefit from a married-male wage premium or the accumulation of assets that comes from a long-lasting partnership. Single parents must divide their time between the marketplace and the home, and single mothers face the gender (p. 427) wage gap. Cumulatively, these factors contribute to the economic disparity between marital and nonmarital household structures.
Marriage as Poverty Reducer
If marriage has so many economic benefits, should marriage be employed as a poverty-reduction tool? This question has been raised most prominently in the United States, as researchers have struggled to identify the causal effects of marriage on economic well-being (Lichter and Crowley 2004; Sigle-Rushton and McLanahan 2004; Foster and Kalil 2007). Some American researchers have conducted simulations in which an unwed mother was “married” to a demographically similar man (Sigle-Rushton and McLanahan 2002; Thomas and Sawhill 2002). Because the only factor that changed was the mother’s marital status, any resulting differences in her poverty levels must have occurred because of her marriage. Results from these simulations studies found that poverty rates decreased considerably.
However, these simulation studies cannot be interpreted to mean that unwed mothers marrying in the real world would see any reduction in poverty. First, it is unclear that policies can be used to persuade parents to marry, as marriage rates are relatively insensitive to policy levers. There are a few exceptions: Austria, for example, saw a 350 percent increase in 1987 in marriage rates, right before a marriage-subsidy program was abolished (Frimmel, Halla, and Winter-Ebmer 2012). But the Austrian government eliminated the subsidy (nearly $3,000 per couple) because it was too expensive. More modest policy efforts to promote marriage have largely been ineffective. The United States tried to induce marriage among low-income adults, through changes to its welfare system and the Earned Income Tax Credit (EITC), a refundable tax credit for the working poor. These promarriage changes have, by most accounts, had little effect on marriage rates (Ellwood 2000; Blank 2007; Graefe and Lichter 2008). Another approach tried by the United States to encourage marriage—providing relationship-skills and premarriage counseling to adults with a shared birth—likewise had minimal effects (Wood et al. 2012).
A more fundamental problem exists, however, in assuming that marriage by itself would cause poverty rates to decrease. The economic advantages of marriage adhere only under certain circumstances—namely, when a marriage is high quality and long-lasting. Indeed, evidence from the United States suggests that mothers who marry and then divorce are economically worse off than if they had never married at all (Lichter, Graefe. and Brown 2003). Marital disruption is one of the primary means by which women, both in the United States and in Western Europe, enter into poverty (D’Ambrosio, Deutsch and Silber 2011). Moreover, the most economically beneficial marriages are those that involve a man with relatively strong attachment to the labor force (Lichter et al. 2003). However, many unmarried mothers may have difficulties in finding a partner with sufficient levels of human capital to successfully engage in the (p. 428) workforce (Wilson 1987, 1996). Research has found that unmarried mothers, relative to women without children, marry men with lower earned income and weaker labor force participation rates (Graefe and Lichter 2007; Lichter and Graefe 2007).
Additionally, studies that have projected economic benefits to marriage have tacitly assumed that marriages among unwed mothers would function in ways that facilitate income growth and reduce poverty. Yet the expectations of how marriage operates are largely based on studies where the sample population married first and then had children. Given the differences between those who select single parenthood and those who do not, it is not clear that marriage would function in the same way for a mother who had her child first and then married.
In sum, marriage is an uncertain means to reduce poverty. First, it is not clear that large numbers of unmarried parents could be convinced to marry and if unmarried mothers would have the kinds of marriages (e.g., stable, with sufficient levels of earnings) that promote economic well-being. Perhaps most fundamentally, however, it is not known how marriages among unwed parents would operate and if marriages among parents would, indeed, be economically beneficial.
Addressing Poverty among Nonmarital Households
As this chapter has indicated, nonmarital households generally have higher poverty rates and lower incomes than marital households. The previous section argued that encouraging marriage among single and cohabiting parents is an uncertain strategy for reducing poverty. In this section, I examine some policy solutions that offer more promise for addressing the economic realities of nonmarital household structures.
The provision of public and private transfers has been found to be extremely effective at reducing poverty among nonmarital family structures. To demonstrate this point, Figure 18.5 returns to the analysis presented by Gornick and Jäntti (2012) to illustrate how transfers affect the poverty rate of single-mother households. Transfers included two types: government and private. Government transfers include policies such as childcare subsidies, paid parental leave, or child allowances through cash or tax benefits. Private transfers refer primarily to the provision of child support, usually provided by a nonresident father. The figure presents two poverty rates: the first is the same used in Figure 18.4 and defines poverty rates based on market income alone. The second poverty rate measures poverty rates after transfer income (net of taxes) has been included.
As illustrated by Figure 18.5, transfers reduce poverty rates quite dramatically. Government and private transfers in Denmark, Sweden, Finland, Switzerland, the Netherlands, Poland, and Austria reduced the poverty rate by more than 60 percent. Transfers in the United Kingdom, Australia, Guatemala, and Ireland reduce it by more (p. 429) than 50 percent. The United States, Canada, and Columbia stand out as outliers because of their small reductions in poverty, and because single mothers in those countries have high rates of poverty even after transfers.
A similar analysis examined how after-tax transfer policies affected the poverty rates of cohabiting couples with children (Heuveline and Weinshenker 2008). Across the 15 countries, transfer policies reduced poverty rates among cohabiting families by 6.5 percentage points. The largest reductions in poverty rates were found for Finland, Australia, and Sweden (Heuveline and Weinshenker 2008).
Scholars believe that it is these country-level differences in transfers policies, rather than family structure per se, that explains the high poverty rates among nonmarital families. The United States is perhaps the best example of this. The United States has, by international standards, a relatively average number of children born of wedlock (see Figure 18.1)—its NMFR falls in the moderate range. Likewise, the before-transfer poverty rate of American single-parent households, when compared to other countries, is again about average (see Figure 18.5). What makes the United States stand out from other countries, however, is that its transfers policies do relatively little to reduce poverty among single-parent households. In the United States, transfers reduce poverty by only 12 percentage points, or by 20 percent. In Denmark, by contrast, government and private transfers reduce the poverty rate by 38.5 percentage points, or 469 percent (see Figure 18.5).
For the United States, the ineffectiveness of transfers in reducing poverty rates among single-parent households is not surprising given that the United States targets (p. 430) its social safety net primarily to the elderly (through Medicare and Social Security) and to those who are temporarily separated from the workforce (unemployment insurance). And these transfer programs have been quite effective; the poverty rate among Americans under the age of 65 fell precipitously after Congress expanded Medicare and Social Security in the mid-1960s (the poverty rate for those 65 and older remains well below the poverty rate for those under 18). The United States, when compared to other European countries, provides relatively little support to single-parent families, and this lack of support translates into high poverty rates.
Scholars have worked to identify the types of transfer programs that might be most effective in reducing poverty among nonmarital households. For example, countries that offer paid parental leave and provide publicly funded childcare for young children had lower poverty rates for single mothers relative to partnered mothers (Misra et al. 2012). Other work (Brady and Burroway 2012) suggests that policies universal in nature, that is, offered to all citizens, had larger effects on the poverty rates of single mothers than did targeted policies, that is, those offered to single mothers in particular. Examples of universal policies are pensions, unemployment insurance, and the provision of health care, whereas targeted policies include family assistance and childcare grants.
Another possible avenue to reduce poverty is to strengthen maternal employment, as employment significantly lowers poverty risk among female-headed households. A study done across 11 industrialized nations compared poverty rates of single mothers with low earnings (earnings that were in the bottom quintile for female earnings in that country) as compared to single mothers with medium to high earnings (earnings that were not in the bottom quintile) (Gornick and Jäntti 2010). The average difference in poverty rates was stark: 95 percent for the low earners versus 41 percent for the high earners. Once transfers were taken into account, the average poverty rate for high-earning single mothers fell to 14 percent. Policies that have been shown to encourage female employment include paid maternity leave, childcare subsidies, and school schedules consistent with ordinary work hours (Misra et al. 2012).
It is important to note that even in the presence of transfers and strong labor market attachment, single-parent households are still more likely to be poor than married-parent households (Gornick and Jäntti 2010). And countries that have generous transfer policies face other trade-offs, including higher taxes and increasing levels of public debt. Nevertheless, providing transfers and strengthening employment ties has proven to be an effective means of reducing poverty among nonmarital households.
What’s at Stake
This chapter has made the argument that the growth of nonmarital family structures has not impacted a country’s well-being, and, while strongly correlated with individual (p. 431) levels of poverty, does not by itself account for much poverty variance. It might be concluded that nonmarital family structures are largely irrelevant to discussions of poverty and that policymakers interested in reducing poverty should focus their attention elsewhere.
However, two factors are important to keep in mind when evaluating the relevance of nonmarital family structures for poverty. First, family structure, because it is so closely correlated with poverty, is an important determinant of the life chances of children (McLanahan and Sandefur 1994). Children who grow up in poverty in the industrialized world are less likely to finish school and have lower earnings and higher poverty rates as adults (Corak 2006; Bradshaw et al. 2007). Notably, they are also more likely to have an out-of-wedlock birth (Duncan et al. 1998). These cross-generational effects are important because it means that as increasing fractions of children grow up in nonmarital households, with its corresponding association with poverty, then an increasing percentage of children are at risk for compromised well-being as adults. Note that the important transmitter of disadvantage is poverty and not necessarily nonmarital family structure. Nevertheless, nonmarital family structure warrants special consideration because it is such a strong indicator of poverty—it demarcates the children most at risk of compromised life outcomes as adults and is a strong indicator that the cycle of disadvantage will be perpetuated.
Another reason to consider family structure in discussions of poverty is that family structure has important, and likely increasing, effects on economic and social inequality. Family structure matters for inequality because family structure has become increasingly stratified by social class (as proxied by education). In the United States, for example, the rise in single and cohabiting parenthood has been disproportionately concentrated among less-well-educated adults (Isen and Stevenson 2011). Women with a bachelor’s degree have seen almost no change in their family formation patterns and, by and large, only have children in the context of marriage. Class disparities in fertility patterns are less pronounced elsewhere, but research confirms that class differences in family structure in Europe and Russia are growing (Perelli-Harris et al. 2010; Perelli-Harris and Gerber 2011). Insofar as only the better educated are choosing marriage, then any benefits of marriage, even if small, will be disproportionately concentrated among individuals who are already socioeconomically advantaged.
Scholars who have investigated how family structure might affect inequality have found that increases in nonmarital households account for an 11 to 56 percent rise in income inequality (see McLanahan and Percheski 2008 for a list of these studies in the United States). The connection between family structure and income inequality is important for two reasons. First, like poverty, income inequality directly impacts the life chances of future generations. Children in lower positions in society may have limited access to the schools, health care, and other public goods that they need to thrive. Second, income inequality may impact overall economic growth (Rajan 2011). The impact of economic inequality on economic growth remains a matter of debate (De Dominicis, Florax and De Groot 2008), but it is possible that nonmarital family structures may someday directly influence a country’s financial health.
(p. 432) Conclusion
Most countries around the globe, with a few notable exceptions, are moving in the direction of decreased fertility and more nonmarital family structures. This chapter has argued that these two factors have had mixed effects on poverty and economic well-being. Decreasing fertility has led to reductions in poverty and increases in financial well-being. The rise of nonmarital family structures has had more ambiguous effects: almost no aggregate impact, but likely a small (but unknown) increase in individual poverty rates.
Given that reductions in fertility have had large positive economic impacts on poverty rates, and that the rise of nonmarital family structures has had (at most) a small negative impact, it could be concluded that changes in modern family structure have, on the whole, been beneficial. Yet, in many industrial and emerging economies, policymakers and scholars alike have raised concerns about the state of the modern family and suggest that modern family arrangements have negative consequences for families and for society.
This concern about the modern family, particularly the rise of fertility outside of marriage, is not misplaced but rather misinformed. Children living in single- and cohabiting-parent homes should be a matter of national interest because they have disproportionately higher poverty rates and lower median incomes than children in other family arrangements. The poverty they experience as children will likely affect their well-being as adults, as childhood poverty has been associated with decreased adult wages and increased likelihood of single parenthood. Single- and cohabiting-parent households therefore serve as an important mechanism through which the intergenerational transmission of poverty occurs.
At the same time, it is likely that family structure qua family structure accounts for only a small fraction of the causal variation in poverty rates. More important factors include labor force attachment and transfer payments; it is these factors that can explain much more of the variance in both country- and individual-level poverty rates. As evidence of their importance, strong labor force attachment and generous transfer payments can greatly reduce the poverty rates of one-parent households (in some countries, by more than two-thirds). In contrast, policies that have addressed marital status have also been associated with decreases in poverty but only on paper. There has yet to be an effective marriage-intervention program that has induced people to marry and lowered their poverty rates as a result.
The impact of labor market participation and transfer programs, in fact, undermines the argument that family structure by itself causes poverty: if one-parent households were poor simply because they had only one parent, then addressing factors other than their marital status would be ineffective. Instead, a more appropriate way to conceptualize the role of nonmarital family structures in poverty rates is to acknowledge that they identify the group of children most at risk of poverty. These children merit special (p. 433) attention because the consequences of growing up poor in a rich country are great. But, as this chapter has argued, the way they merit special attention is not through marriage, but through policies and programs that facilitate their family’s economic health.
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(1.) Author’s calculations using data from the Luxembourg Income Study.
(2.) In this review, I have tried to include data from as many countries as possible. However, most of the work on nonmarital family structures has been concentrated on a select group of countries, particularly those in Western Europe and North America. Where possible, I have included research from emerging economies and other regions. Much work remains to be done, however, on how nonmarital family structures affect poverty and inequality outside the Western or European context.
(5.) To the best of my knowledge, very little research has been done on the associations between cohabitation and poverty levels for countries outside the United States and Western Europe.