The paper examines the impact of income on the transitions between home, living independently and first marriage of young Americans. A matching model is outlined, similar to that used in theories of job search, to explain the probability of marriage and living alone. A multiple-state, multiple-transition model which allows for correlated heterogeneity on the first and subsequent transitions is estimated. The results show that income has a strong and significant effect. The impact of unobserved heterogeneity is examined in detail. The impact of the young person's earnings on the transitions is explored through simulation.
Authors
Andrew Chesher
Andrew is the Director of the ESRC Centre for Microdata Methods and Practice (cemmap) and Professor of Economics and Economic Measurement at UCL.
Arnstein Aassve
Simon Burgess
Carol Propper
Carol is a Research Fellow at the IFS and a Professor of Economics in the Department of Management and Imperial College Business School, London.
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