Fewer Americans are getting married, and if economic analysis has it right, that trend is probably here to stay.
The first study in our weekly research wrap uses a natural experiment — the wage windfall from U.S. fracking — to see whether a labor-market boost could spur less-educated men to tie the knot. The outlook isn't great, it finds. We've also summed up research on the long shadow slavery and segregation has cast on economic mobility for U.S. blacks, China's options to finance its massive infrastructure ambitions, and how superstar firms are affecting labor share of income. Check back each Tuesday for the latest in new and interesting economic work from around the world.
Marriage: it's a social story
Marriage rates in the U.S. have fallen off, and a leading explanation for the trend centers on the economic fate of men. As male employment and earnings have eroded, the theory goes, men have become less attractive marriage partners. To test that idea out, University of Maryland economists Melissa Kearney and Riley Wilson look at how marriage patterns changed in response to the fracking boom — a natural experiment, because it quickly boosted earnings for non-college educated men in the areas where it concentrated.
Interestingly, they find that while births increased in areas that caught a fracking windfall, weddings did not. That contrasts with the 1970s and 1980s Appalachian coal boom, where a step-up in male pay did boost marriage rates.
The takeaway here is that social context matters: economics may have played a role in sparking the decline in marriages, but a pickup in wages won't necessarily reverse the change now that out-of-wedlock childbearing has become normal. "As non-marital births become increasingly common, individuals are more likely to respond to increased income with increased fertility, but not necessarily with marriage," the authors write.
Male Earnings, Marriageable Men, and Nonmarital Fertility: Evidence from the Fracking Boom
Published May 2017
Available at the NBER website
America's long history of racial disadvantage
The kids of poor white families have had much higher rates of upward mobility than similarly-situated blacks since 1880, new research finds. "Large racial differences in economic mobility, conditional on parents’ status, continued into the post-World War II era despite the Great Migration and the passage of Civil Rights legislation," based on the study by Vanderbilt University's William Collins and the University of Tennessee's Marianne Wanamaker. The mobility gap in 1973 — almost a decade after the Civil Rights Act — was similar to that in 1900, the height of institutionalized segregation, looking at sons and conditional on their father's occupational status.
This has really held back economic progress for the race, and part of the story probably lies in educational disparities. Since gaps in test scores remain significant, "racial disparities in mobility and income may endure for generations to come."
Up from Slavery? African American Inter-generational Economic Mobility Since 1880
Published May 2017
Available on the NBER website
Who should pay for China's big plans?
China's "One Belt One Road" initiative, President Xi Jinping's plan for billions of dollars of infrastructure investment in countries along the ancient Silk Road linking China with Europe, is a good idea that the Asian nation probably can't finance on its own, Alicia Garcia-Herrero, a senior fellow at the Brussels-based think tank Bruegel, writes in a new post. Her logic: China's economy has slowed, its foreign reserves have fallen, and Chinese bank balance sheets are increasingly saddled with questionable loans. If the country needs to look elsewhere for funding, European banks might be well-placed to step up their financing, she argues.
That could make for tighter economic ties between China, the world's second largest single economy, and Europe. "We should expect private and public European co-financing of Belt and Road projects to increase over the next few years and, with it, European interest for Xi Jinping’s Grand Plan," Garcia-Herrero writes.
China cannot finance the Belt and Road alone
Published May 12
Available on the Bruegel website
China leads in green bonds
Speaking of Chinese finance, the nation has become the world leader in green bonds. The instruments pay interest like normal bonds, but dedicate funds to environmental cleanup and climate change, and China went from not being a player before 2015 to becoming the globe's largest issuer in 2016. In fact, China accounted for almost three-quarters of the increase in global green bonds between 2015 and 2016, research by San Francisco Fed analysis Nicholas Borst shows.
China Looms Large in Global Green Bonds
Published May 11
Available on the San Francisco Fed website