“>Ariel J. Binder and John Bound write,
The existing literature, in our view, has not satisfactorily explained the decline in less-educated male labor-force participation. This leads us to develop a new explanation. As others have documented, family structure in the United States has changed dramatically since the 1960s, featuring a tremendous decline in the share of less-educated men forming and maintaining stable marriages. We additionally show an increase in the share of less-educated men living with their parents or other relatives. Providing for a new family plausibly incentivizes a man to engage in labor market activity: a reduction in the prospects of forming and maintaining a stable family, then, removes an important labor supply incentive. At the same time, the possibility of drawing income support from existing relatives creates a feasible labor-force exit. We suspect that changing family structure not only shifts male labor supply incentives independently of labor market conditions, but also moderates the effect of a male labor demand shock on labor-force participation. Since male earning potential is an important determinant of new marriage formation, a persistent labor demand shock which reduces male earning potential exerts an impact on male labor-force participation which operates through the marriage market.
Thanks to a reader for forwarding the paper.
Let me add to their story. Once upon a time, a woman with a child needed a husband for support. But in recent decades, government benefits have provided support. Moreover, these benefits go away as a household earns income. At the margin, a man who earns a modest wage has his income implicitly taxed at a high rate should he marry the mother of his child. The woman has little or no economic incentive to marry him, because together they cannot keep much of the income that he earns. And so he drops out of the labor force, because he no longer is motivated to work in order to get married.
Most studies fail to show an effect on labor supply of policies that change the way that benefits are provided and taxed. But these studies are limited to short time periods. In my view, our benefits policies have over a long period of time created a poverty trap by changing cultural habits. If we were to change those policies, and in particular replace existing means-tested programs with a universal basic income, it would take a long time for cultural habits to re-adjust. But my hope is that if government stopped holding people in the poverty trap, cultural habits eventually would improve.
https://www.nber.org/papers/w25577.pdf I am guess is where the quote comes from
The data appendix to the above paper makes an interesting read as well: https://www.nber.org/data-appendix/w25577/Binder_Bound_maleLFP_appendix_revisionFinal.pdf
Sorry for the double comment. The authors note that incarceration rates have not been accounted for, and surely there is some drug war residue in the employment and educational completion stats, but I didn’t notice any mention of psychiatric epidemiology. Although certainly overlapping partially with incarceration, increases in the incidence of mental disorders have been observed and studies have found a correlation with decreased educational completion rates as well as unemployment among those with mental health diagnoses, particularly childhood onset diagnoses. A curvilinear relationship between suicide rates and educational attainment has been found with those with the least and the most education most at risk.
Even as a left center this is probably correct long term but the short term realities of the most effected areas of the nation would decline a lot for 10 – 15 years.
I also believe even with these changes I believe the US would become more like East Asia which is not a bad thing but we would return to our visions of 1950s.
Government programs are remarkably effective at destroying, eroding or corrupting the cultural habits and traditional ways whereby people get by in the conduct of their lives. Unfortunately, they’re terrible at providing an effective alternative, one that doesn’t create a dependent, infantilized underclass. That’s why “wars on poverty” can never be won.
Arnold:
I’m missing something because I don’t see how UBI helps.
With UBI there’s still no economic incentive for the man and woman to get married. They can live separately and both get UBI. So there’s no economic ‘push’ for the man to work or the woman to get married.
For that matter, if the man started working presumably child support would be reviewed and there would be an implicit tax there.
You don’t lose UBI when you get married. You lose current transfer payments. In other words, the marginal tax on getting married/working is zero with UBI.
OK, but either (1) the UBI is enough for someone to live on or (2) it isn’t
If (1), then we’re back to there not being a strong economic benefit to get married. With the background context of a couple with some combination of low impulse control, high time preference, and low cultural drivers toward shotgun marriage. Yes there’s a benefit to combining households, but the Bayesian prior is that they are not making decisions on economic rationality.
If (2) that creates the economic back pressure for shotgun marriage, but also triggers the political forces that broke the cultural milieu in the first place. And they then agitate to raise the UBI to (1).
Co-habitation still provides efficiencies, for instance on paying rent and sharing meals. So there’s an incentive to live together on UBI, but not if (as with the current welfare system), cohabation will cause loss of welfare benefits. The UBI won’t be reduced if the father of one’s child moves in.
UBI is terrible because it subsidizes not-working.
What society needs is support for married people having children.
Universal Support for Married People with Children.
Start with this, instead of UBI for all.
It doesn’t help the single folk; those who live at home.
It doesn’t help the poor single mothers << this is what makes it politically unfeasible.
Not wrong, unfeasible. But incentives matter.
To get more people doing X, the gov't should subsidize / give tax credits, to those who do X. Including getting married and having children.
UBI does recognize the poverty trap of "means testing", whereby gov't support for the poor ends, usually abruptly, at low income thresholds — so it's a very high marginal post-gov't (benefit-tax) net tax rate.
Maybe only 100% of the gov't subsidy to those couples whose combined income is up to $120k (twice the median of $60k, to change with median each year), and reducing from there.
Tho maybe not.
For demographic purposes, best for the USA would be if the higher paid couples had more children.
The basic gov't support problem is this: to incentivize success, one should reward … the successful. Those who need it the least.
Like is done by the market, free people making free choices that they think are best for themselves (people do exist, the "market" is a phrase that means these people's choices). Gov't support seldom supports long-term success, which is why so much gov't stuff is NOT successful.
Give a UBI per child to the mother, and give the same UBI per child to the biological father provided he is married to the mother. Call it the “fatherhood bonus” or something like that. Single mothers aren’t being penalized (their UBI doesn’t change), fathers are being rewarded for sticking around.
Monthly UBI per child (up to 2):
Under Age 2:
Mother: $500
Father (biological, married to mother): $500
Age 2-18:
Mother: $250
Father (biological, married to mother): $250
Any mother with two or more children is exempt from the employee portion of SS tax. Any biological father married to her is also exempt. This is because having kids funds future SS.
Children under 18 can now increase the standard deduction on the federal tax returns when you use married filing jointly, provided it is the two biological parents.
Single: $12,000
Married: $24,000
Married + 1 kid: $36,000
Married + 2 kid: $48,000
Married + 3 kid: $60,000
etc
Homeschool Allowance: Any mother with two or more kids under 18 who decides to remain home and homeschool receives a $10,000 yearly allowance tax free. The person can’t engage in paid employment about some low nominal threshold. They are essentially being paid to homeschool and shouldn’t have other employment.
You’ll note that this only rewards families who are married. The UBI part gives everyone something to like while the tax incentives reward work and scale up with both income and kids while cutting off before the level that the very rich would care.
If people question the whole biological parent thing just say that being able to give anyone an income stream by sham marrying them is too rife for abuse.
I don’t know what this would cost and you could change a lot of the numbers, but I figure this is a good way of thinking about it.
Questions about your UBI proposal:
What is your subjective probability that a Kling UBI would increase marriage rates and labor-market participation, among men without a college degree, enough to warrant the expenditure?
What is your subjective probability that a sausage-factory UBI would increase marriage rates and labor-market participation, among men without a college degree, enough to warrant the expenditure?
My priors (which I will update with an open mind!):
1) It’s hard to predict the long-term, net, equilibrium effects of a major policy change when social norms are in play. (Background question: Is Charles Murray’s Belmont/Fishtown split an equilibrium?)
2) A substantive UBI would require much greater resources than the extant social safety net. For a review of the limited (mostly indirect) evidence so far, see Hilary W. Hoynes & Jesse Rothstein, “Universal Basic Income in the U.S. and Advanced Countries” (2018); ungated typescript here: https://gspp.berkeley.edu/assets/uploads/research/pdf/Hoynes-Rothstein-UBI-081518.pdf
The authors conclude: “A UBI would direct much larger shares of transfers to childless, non-elderly, non-disabled households than existing programs, and much more to middle-income rather than poor households. A UBI large enough to increase transfers to low-income families would be enormously expensive. […] In particular, replacing existing anti-poverty programs with a UBI would be highly regressive, unless substantial additional funds were put in.” (pp. 1 and 23).
Related: https://www.nationalreview.com/magazine/2019/03/25/the-american-dream-is-crumbling/
Why it call it evolution?
Doesn’t it seem as though all this manipulation of incentives is building on complete or partial government failures that have preceded this UBI concept?
The republic was built, and has become the most economically successful nation in history, on the efforts of individuals pursuing their own definitions of “happiness.” What was wrong with that, that we believe that we can improve upon it?
The more the government tries to push/nudge/coerce individuals to act this way or that, by using extremely broad economic benefits brushes to paint a diversely-motivated population, the more it reveals adverse unintended [maybe] consequences.
Why not just butt out and let people set their own priorities, use their own resources gained by their own efforts, and achieve their own chosen destinies?
Are we just not sinking further & deeper into this “fatal conceit” that we “know” how to help people discover their notion of “happiness” (or save them from themselves?) if we just give them a bit of this or that?
The status quo involves all sorts of perverse incentives. Libertarians have failed to eliminate these for quite a long time now, and have no credible plan to do so in the future, or even to prevent them from increasing. At a certain point one has to acknowledge their plan isn’t working.
So right, adsf. Tho so sad.
It’s not politically credible. Despite evidence in Singapore & Hong Kong, and multiple rating systems that show low tax, small gov’t places are better — the elite continue to want bigger gov’t.
The elite deny the success of small gov’t places — small gov’t deniers.
Honest question: Is there a nation with a population of say, 30 million people or more that has an appreciably smaller government than the US and could be held up as an example that smaller government works for a modern country with a large population? That isn’t to say that the lack of an example means that smaller government isn’t a good idea (democracy in the US was called an experiment for a reason), but having an example to point out that is larger than a city state would be helpful.
Why not just not reduce welfare benefits (or not reduce them as much) if the father moves in and starts supporting the mother?
A more gradual phase out of welfare as parents start earning could have the same effect without requiring a radical experiment like UBI. Since we know that welfare isn’t going anywhere it’s more politically viable.
The welfare point is oversold. It is just one way women have direct access to income: that general access is the much more salient point.
The advent of birth control is a huge confounder. In the 1950s, sex reliably led to pregnancy, and marriage was the only socially acceptable response. Now it’s possible to be sexually active for decades without children.
Also, social class plays a role. Children have a huge opportunity cost for women who have opportunities, but opportunity costs go to zero as opportunity does.
Using OECD data to compare various nations, less-educated unemployment trends, there appears to be a common shape to the trend lines but at different unemployment levels. Canada, France, Germany, Ireland all have higher levels of unemployment among the less educated than the USA, but lots of other countries both large and small have lower unemployment rates.
Korea looks best. One wonders what makes Korea so much better than the USA. Probably schools. But the USA will never be able to undertake any meaningful education reforms with union control of the Democrat party.
As a substitute for the vast hodgepodge of overlapping programs and countless bureuacracies, UBI looks like a reasonable alternative. But here too, the political clout of the bureaucrats renders reform efforts futile.
A step in the right direction might be on healthcare. A grand bargain could be reached by enacting Medicare for All with some compromises –
(1) drop the provisions outlawing private health insurance
(2) eliminate the tax advantage for employer sponsored health care
(3) include the Veterans Health Administration (in Sanders version VA hospitals would continue as is) along with all of the other federal health care programs to be eliminated. Sanders’ long term goal is direct federal employment of all health care providers. That must not happen.
(4) pay for it with a VAT that taxes imported goods as well as domestically produced goods.
Such a deal might be politically feasible.
OECD data: https://data.oecd.org/unemp/unemployment-rates-by-education-level.htm
I would assume that the important thing is that Korea is an East Asian country with a strong Confucian heritage. But I cannot find good data on Japan. Also, I think that the workforce participation rate would be a better measure of work ethic, and I suspect that it is very high in both Japan and Korea. Also, for Japan and Korea, I would be suspicious of using numbers for people who didn’t complete high school. The reason I would be suspicious is that I suspect that due to cultural differences, the population in those countries who didn’t complete high schools may be very different than the population who didn’t complete high schools in cultures that don’t value education to such an extreme.
Recently I was reading a hard copy book of Thomas Sowell’s essays and he noted that he “did not complete high school” though he later went on to do graduate work and have a distinguished career. The essay title escapes me offhand.
It would be nice to know how those statistics are compiled.
In the early 1980s in New York State it was easy to leave high school by dropping out and then get one’s GED. It seems that doing so has since been made harder.
Charles Murray (I think it was he) noted that it until some time in the mid 20th century it used to be that leaving school was not dropping out but “moving on.”
Sorry for double post. Dropping out is a measure of some “unobserved attribute” which is hard to measure directly. Probably Bryan Caplan would say good marks in school and earning a degree are a sign of diligence and/or conscientiousness, while dropping out is a sign of things that are probably bad–lack of conscientiousness and some sort of oppositional personality stance.
Dropping out is a mark of being unable or unwilling to fit in.
The issue is more complicated than it seems. Once I was reading biographies of successful Nigerian businessmen / women–this is when a lot of them were long distance traders, long before the oil boom. “Running away from home” and having a difficult personality was viewed, retrospectively, as the mark of strength of character to succeed in business. Business magnates tended not to be diligent student strivers, but troublesome from childhood.
Let us now praise famous dropouts. Jack London, Josph Brodsky, Thomas Sowell…
As Nassim Nicholas Taleb noted, there are high schools named after high school dropouts.
Sadly, these days it’s harder and harder to succeed without at least a B.A.
But yes, no need to be perverse in the argument, dropping out these days is not usually a good sign of future success
My suspicion is that in countries like Japan or Korea, failing to complete high school these days would be an indication of very severe problems faced by someone, and that even those well on the left of the bell curve in all sorts of ways would still complete high school because of cultural expectations, unlike say in somewhere like maybe a former Soviet Republic. Hence the signal is really different in those two countries.
” my view, our benefits policies have over a long period of time created a poverty trap by changing cultural habits.”
I feel like there’s an unstated assumption here. That the “natural” cultural habit is a high marriage rate. And government economic incentives at the margin are artificially depressing it.
What if that isn’t the natural cultural habit? What if the high marriage rates we desire were artificial, and only occurred because women were dependent on men? Maybe if women are not dependent on men, low marriage rates are natural and expected? For example, the high divorce rate among boomers, really the first generation for whom divorce was an acceptable option.
Maybe–even with a zero tax rate and zero benefits–if women are independent of men, low marriage rates are what naturally happen. In that case, a UBI would not do anything. And to be honest, we’re not going to try and force women to become dependent on men, so marriage rates and culture will never become “healthier”.
Orlando Patterson (Jamaican born) has noted that Jamaica’s lower class is matriarchal, the upper class patriarchal. He has noted that in passing in popular essays.
There is an old saying: “a woman with a child is a biological fact. A father with a child is a social achievement.”
I don’t know what the evidence in all its variety indicates, but certainly someone has researched this. Probably there are multiple equilibria.
It’s an empirical question. I would check the “Human Relations Area Files” to start with.
Women depending on men does seem to be the “natural cultural habit”. It is by far the most common condition in the last 5,000 years. But
1) so much of what we do today isn’t natural.
2) what is natural isn’t necessarily what’s right.
I’m sort of aghast at the idea, implied here, that men have essentially only one purpose, or goal, in life: to provide financial support. After all, the post clearly indicates that the (only) reason why men are unemployed is that they don’t have dependents.
In my experience, men enjoy all sorts activities that require money, which has to be earned. And, they earn it for those purposes.
Indeed, one of the most commonly-cited reasons I’ve heard for not marrying and/or having children is that it’s so extraordinarily expensive, i.e., that men have other, higher priorities for their time and money. And, the complaints of divorced men rarely center on the lack of a family to support, but rather on the continuing prodigious expense. Perhaps, then, in a world where family is expensive and men are having trouble finding work, men avoid having families – and the causality is reversed?
We’ve spent a century listening to women quite rightly complain about sexist assumptions about their place in the world. How about we start to recognize that men are people with goals, hopes, and aspirations of their own – which may well include, but are hardly solely limited to, having a family?
There’s a lot of really good comments here. I agree with Arnold’s addition to the story. I would add more, though, which is that men who have children with women and have any financial assets are at considerable risk. Wealthy, educated men still come out ahead, but low income men are often put in jail if they can’t pay child support. Meanwhile, low income women who have children they can’t afford are not only not penalized, they get additional income.
The only solution I can see is to pay low income children, both boys and girls, for going to school and not being criminally involved. Girls get paid a premium over that for not having a child. If girls get pregnant and have the child, they lose that premium and they no longer get the payments. They go get the money for welfare, food stamps, etc, but no payments.
Boys lose *no* money–none–for fathering a child. If we give the girls the choice to have a child or an abortion, then we recognize it’s their choice and their money they lose if they have the child.
The money goes to the kids, starting at the age of 13. Not the parents, but the kids. they can do whatever they want with it, although maybe some matching payments if they bank it. If two people get married and have a kid, they can apply for a *small* increase in their UBI, and if that’s better than they can do with a job, ok.
If that’s UBI for poor kids, fine. But if you start it early enough, you’ll reduce further supply of poor kids and (this is the reason I want it) you can invest more in the poor kids that do exist.
It’s sad that there seem to be no good experiments in paying poor kids to go to school and avoid crime.
I’m sure it would “work” – be a big improvement. Tho not solve all the problems.
While we’re at it, why don’t we remove the incentive for poor people to have (or keep, rather than adopting out) children they can’t afford, by dismantling the child support law and going back to the pre-WW1 rule that mothers aren’t entitled to child support unless they marry the father. I confidently expect that this rule, applied only to kids conceived after its enactment date, would not cause any kids to starve but would prevent the creation of future kids who should not be created.