The growth of nonmarital fertility, together with greatly increased divorce rates and an increased proportion of children living in femaleheaded households, has provoked considerable alarm about the demise of the traditional family and concern about potentially harmful effects on the well-being of women and children. In this paper, I briefly summarize recent attempts by myself and others to develop a coherent theoretical framework to integrate economic theories of fertility and marriage in order to better understand why the same men who play the breadwinner role within marriage may fail to support their children following a divorce or who, despite the “gains to marriage,” may prefer to father children out of wedlock rather than within marriage. I argue that such behaviors of men can be understood within a framework that takes into account the selfinterests of both men and women as they interact within a given sexual or marital match and as they interact in a broader “market” for sexual and marriage partners. At the level of a given match, the theory provides hypotheses about the determinants of voluntary child support by fathers who are divorced from or have never married the mother. It also suggests reasons why voluntary child support is likely to be inadequate and, consequently, provides some insight about the role of laws and administrative procedures designed to establish paternity, determine the size of childsupport awards, and enforce collection of awards. At the level of the market, under certain circumstances, theory produces results similar to those emphasized by William Wilson and Katherine Neckerman’s (1987) theory of outof-wedlock childbearing among the underclass.

The family is distinguished from other social institutions, such as firms, by its crucial role in the production and nurture of children and its rationale is ultimately to be found in the preferences of individuals for own children. Sexual reproduction means that the production of one's own child requires the participation of another person of the opposite sex. The production of a child who will survive, become a successful adult, and produce his or her own children requires the expenditure of both personal and purchased resources over a lengthy period of time. Although interesting insights on the family can be culled from the classics, systematic development of the economics of the family is a recent phenomenon, beginning in the late 1950's when Harvey Leibenstein (1957) and Gary Becker (1960) attempted to address the determinants of fertility behavior within the framework of consumer theory. In this paper, I provide a brief overview of the history of family economics since 1960 and, along the way, offer a selective assessment of what has been learned from it. I attempt this assessment by asking how far we have progressed in answering a few of the larger theoretical, empirical, and policy questions that have motivated economists' interests in an area customarily studied by sociologists and demographers, or that have caused economists dealing with more traditional subject matter to incorporate the family into their work. Among the set of questions that have been addressed within the literature during the past twenty-five years are: 1) What are the causes of the historical association between economic growth and development and demographic transition from high to low levels of fertility and mortality? Of what relevance is the historical experience of currently developed countries to contemporary LDCs? Should fertility reduction be a primary goal of policy in the developing countries? Are the developed countries in danger of extinction because of fertility below replacement levels? 2) What was the cause of the post-World War II and subsequent bust? Was the baby boom a one-time aberration from a secular decline in fertility, or can we expect substantial fluctuations in the birth rate in the future? What are the consequences of the baby boom for the economic welfare of cohorts born during and after the boom? 3) Is the traditional family dead in the United States and other developed countries? Why did the divorce rate double in a decade? Why the growth in female-headed households? Why do so many divorced fathers fail to support their children? Has the sexual division of labor within the family changed as a consequence of the growth of female labor supply? To what extent are these changes in the family caused by social policy, and to what extent are they a product of basic market forces associated with modern economic development? What are the consequences of these changes for the welfare of future generations? I attempt to touch on some issues from each of the three areas in which the questions are grouped. However, constraints imposed by limitations of space, time, and most imtDiscussants: Kenneth Wolpin, Ohio State University; Robert Pollak, University of Pennsylvania; T. Paul Schultz, Yale University.

In 1960, marriage was a virtual precondition for childbearing. By 1997, out‐of‐wedlock births accounted for 26 percent of fertility among whites and 69 percent among blacks. This paper presents a model that integrates economic theories of fertility and marriage to help understand the growth of out‐of‐wedlock childbearing. In the theory, fathers can shift the costs of child rearing to single mothers. If females are in excess supply and have sufficiently high incomes, a marriage market equilibrium may exist in which children are born within marriage to high‐income parents, whereas in low‐income groups men father children by multiple partners outside of marriage.

Abs tract This paper proposes an econometric methodology to deal with life cycle earnings and mobility among discrete earnings classes. First, we use panel data on male log earnings to estimate an earnings function with permanent and serially correlated transitory components due to both measured and unmeasured variables. Assuming that the error components are normally distributed, we develop statements for the probability that an individual's earnings will fall into a particular but arbitrary time sequence of poverty states. Using these statements, we illustrate the implications of our earnings model for poverty dynamics and compare our approach to Markov chain models of income mobility. *Thls draft supersedes an earlier version of this paper which was

"This article investigates the role of surprises in marital dissolution [in the United States]. Surprises consists of changes in the predicted earning capacity of either spouse. Data from the National Longitudinal Study of the High School Class of 1972 is used. We find that an unexpected increase in the husband's earning capacity reduces the divorce hazard, while an unexpected increase in the wife's earning capacity raises the divorce hazard. Couples sort into marriage according to characteristics that are likely to enhance the stability of the marriage. The divorce hazard is initially increasing with the duration of marriage, and the presence of children and high levels of property stabilizes the marriage."

An analysis of the economic impact of divorce settlements in the United States is presented using data for a white cohort taken from the National Longitudinal Study of the High School Class of 1972. "The effects of spouses' incomes on the divorce transfer are estimated and used to simulate the welfare effects of divorce on husbands, wives, and children under alternative assumptions about marriage contracts and the ability of a couple to continue coordinating resources in the aftermath of divorce. We find a positive (negative) relationship between divorce transfers and the growth of husband's (wife's) earnings during marriage. The estimated expenditure on children in the divorce state is only half the accustomed level during marriage."

The failure of many divorced fathers to comply with court-mandated child support awards has been identified as a major reason why a growing number of children live in poverty in female-headed households. This paper presents a model that seeks to explain why so many divorced fathers allow their children's welfare to suffer as a consequence of divorce. The point of departure is the recognition that children are collective consumption goods from the point of view of the father and mother. Within marriage, proximity and altruism serve to overcome the "free-rider" problem associated with the provision of public goods. However, on divorce the noncustodial parent suffers a loss of control over the allocative decisions of the custodial parent and it is not feasible for the couple to achieve a Pareto-optimal allocation of their joint resources. A model of optimal marriage contracts is constructed in which a couple decides on the allocation of resources within marriage and on the terms of a settlement in the event of divorce. The settlement consists of the determination of custody and transfer of income to the custodial parent. Divorce is endogenous in our model and its occurrence depends on a random variable introduced into the family budget constraint that measures the quality of the marriage match. The analysis yields several useful insights. In addition to explaining the apparently insufficient support by custodians we explain why custody rights and alimony transfers often go in the same direction, most commonly to the wife, and why uneven distribution of income between the spouses increases the probability of divorce.