Job Turnover, Wage Rates, and Marital Stability:
How Are They Related?

Avner Ahituv
University of Haifa and Urban Institute

Robert Lerman1
American University and Urban Institute

November, 2004



Abstract

This study examines the interplay between job stability, wage rates, and marital instability. We use a
Dynamic Selection Control model in which young men make sequential choices about work and
family. Our empirical estimates derived from the model account for self-selection, simultaneity and
unobserved heterogeneity. The results capture how job stability affects earnings, how both affect
marital status, and how marital status affects earnings and job stability. The study reveals robust
evidence that job instability lowers wages and the likelihood of getting and remaining married. At
the same time, marriage raises wages and job stability. To project the sequential effects linking job
stability, marital status, and earnings, we simulate the impacts of shocks that raise preferences for
marriage and that increase education. Feedback effects cause the simulated wage gains from
marriage to cumulate over time, indicating that long-run marriage wage premiums exceed
conventional short-run estimates.


JEL Specification: C15, C33, J12, J31, J63
Keywords: Marriage and Marital Dissolution, Job Turnover, Wage Rates, Panel data




The authors gratefully acknowledge the financial support for this research provided by the National Institute
for Child Health and Human Development. We also thank Henry Chen for excellent research assistance and
the seminar participants in the European Summer Symposium in Labor Economics (ESSLE), European
Association of Labor Economics (EALE), the University of Haifa and Tel-Aviv University for useful
comments.
1 Corresponding Author: blerman@ui.urban.org

1



I. Introduction
The trends toward later and shorter marriages have contributed greatly to the changing
family patterns of the last half of the 20th century (Wilson 2002). Not only are marriages lasting
fewer years, the sources of marital dissolution have shifted dramatically from less widowhood to
more divorce. Today, marital instability is common in most industrial countries but especially in the
United States. In a recent cohort, 17 percent of men had separated or divorced by age 28;1 by age
35, 20 percent of women had experienced a second divorce; and about 20 percent of marriages were
dissolved during the first 5 years. One consequence of this instability is a high and rising rate of
single parenthood. Between 1960 and 1996, the share of children not living with two parents more
than tripled from 10 to over 30 percent. As of 1999, only about 60 percent of children lived with
both biological and/or adoptive parents (Lerman 2001). The evidence is strong that growing up in
one-parent families and unstable families is closely associated with long-term economic and social
difficulties (Waite and Gallagher 2000; McLanahan and Sandefur 1994).
The high levels of marital instability in the U.S. have been taking place in the context of high
levels of job instability. Every month, millions of workers leave one employer and take a job with
another employer. It takes young workers a long time to enter a stable career and a long-term
relationship with an employer. By the age of 30, high school graduates with no college have already
worked for an average of eight employers. Nearly half of all male high school graduates experienced
at least one spell of unemployment between ages 25-29 (U.S. Bureau of Labor Statistics 2000).
Moreover, job instability is increasing among young men (Berhardt et al. 1998).

1 These tabulations come from the author’s of the 1979 National Longitudinal Survey of Youth. In
subsequent sections, we do not distinguish between separation and divorce, and use the terms divorce or
dissolution.