The role of relative income in the share of children born out-of-wedlock in the USA

This paper investigates the non-marital fertility evolution in the USA for the period between 1976 and 2016. Beyond the well-known determinants in this framework, we add and test for the Easterlin relative income hypothesis. Easterlin stresses the role of the material aspirations formed in childhood (denominator) relative to the current economic perspectives (numerator) of young men. That ratio defines the relative income. We employ panel dynamic techniques at the state level. We find a negative and statistically significant effect of the relative income in the share of children born out-of-wedlock. Most importantly, relative income is robust to the inclusion of marriage. The latter may imply a socio-economic mobility perspective.