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The Effect of Marriage on the Wages of Americans: Gender and Generational Differences

By William Song and Theresa Tong

A substantial body of literature on the wage effects of marriage finds that married American men earn anywhere from 10% to 40% higher wages than unmarried men on average, while married American women earn up to 7% less than unmarried women, even after controlling for traits such as background, education, and number of children. Because this literature focuses heavily on men born in a single time period, we study both men and women in two different generational cohorts of Americans (Baby Boomers and Millennials) from the National Longitudinal Surveys of Youth to examine how the wage effects of marriage differ between genders and across time. Using a fixed effects approach, we find that Millennial women—but not Baby Boomer women—experience an increase in wages after marriage, and we replicate the finding from the literature that men experience an increase in wages after marriage as well. However, after controlling for wage trajectory-based selection into marriage by using a modified fixed effects approach that allows wage trajectories to vary by individual, we find that the wage effects of marriage are no longer statistically significant for any group in our data, suggesting that the wage differences between married and unmarried individuals found in previous studies are primarily a result of selection.

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Advisors: Professor Marjorie McElroy, Professor Michelle Connolly | JEL Codes: C33; D13; J12; J13; J22; J30

The Decision to Marry of Cohabit and Economic Crises

By Jennifer Garand

This paper aims to investigate the relationship between peoples decisions to marry or cohabit and their economic circumstances  both personal, as measured by their employment status, and peripheral, as measured by the unemployment rate in their local county. This paper will look at the role economic factors, as well as demographic and personal factors, play in the decision of whether or not to marry, cohabit, or stay single.

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Advisor: Marjorie McElroy, Michelle Connolly | JEL Codes: D1, J12, J16 | Tagged: Marriage, Unemployment, Demographics, Cohabitation

Tying the Knot: Links Between the Labor and Marriage Markets

By Shafiq Haris, Alexander Prezioso, Michael Temple, Logan Turner, Kevin Zipf, Elizabeth Di Giulio, and Joseph Ueland

This paper analyzes the impact of exogenous shifts in the labor market on the marriage market. The relationship between these two markets is complicated by their reverse causality. That is to say, labor market decisions play into marriage market decisions, and vice versa. In order to mitigate this simultaneous determination, this paper adopts and furthers a methodology utilized by Autor, Dorn and Hansen (2015). Henceforth referred to as ADH, the authors analyze the effects of trade on local labor markets between 1980 and 2007. All 722 commuting zones in the continental United States were evaluated with respect to their level of exposure to increasing competition from Chinese imports, and the share of jobs within the commuting zone considered “routine,” and thus susceptible to computerization and/or mechanization. The authors analyze the impact of these independent variables on labor force participation. This paper takes Autor, et al’s analysis one step further by using the routinization and trade variables as instruments through which we can observe the exogenous impact of the labor market on marital status shares. This paper progresses through two specifications before ultimately utilizing a TwoStage Least Squares analysis with Autor et al’s instruments to isolate the impact of decadal changes in the labor market on decadal changes in male and female marital status shares. Analysis is performed on different age groups, as both the marriage and labor market are different for people of different ages. The first specification applies Autor, et. al’s righthand side with marital status shares as dependent variables. The second specification adds labor market ratios, which relate male and female labor market status. The previously mentioned final specification offers easily interpreted results and is the most encompassing model. Overall, we find that the labor market affects the marriage market much like the current literature would suggest. For example, as male employment increases, the share of females never married decreases and the share of females married increases. This relationship is consistent with existing marriage market theory. However, the results suggest that the literature does not hold in the oldest age group in the data, as power dynamics in the marriage market shift. Our methodology and findings are unique, as we explore this field through a new lens. Future research can expand upon this by incorporating a dataset with information regarding cohabitation habits and consistent longitudinal variable measurements for controls.

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Advisor: Marjorie McElroy | JEL Codes: J1, J12, J21 | Tagged: Employment, Marriage

Gender Equality as a Result of Offering Employee Benefit Policies

By Meghan Mcaneny

In this study, I investigate the relationship between the percentage of women in leadership in a company and its employee benefits. This papeuses data on individual firms’ benefits such as paid parental leave, familial support, and flexibility arrangements. Using OLS, I conclude that benefits that shift familial burdens from women to men, specifically paid paternity leave, result in more women in leadershipThis creates an even playing field for women to be promoted as the company environment does not penalize women for using benefits. I also find a negative relationship between reimbursement for fertility procedures and women in leadership.

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Advisor: Alison Hagy, Marjorie McElroy | JEL Codes: J22, J32, M51, M52 | Tagged: Employee Benefits, Women in Business Leadership, Work-Life Balance

The Hidden Costs of Central Bank Borrowing

By Shane Hunt

This paper explores a previously overlooked unintended consequence of a private bank accepting Central Bank loans as a lender of last resort. Applying the basic Markowitz Security Model, I explore the potential effect of a private bank accepting a Central Bank loan as a signal of increased risk of investment in that private bank to the private markets. Finding a possibility that private investors will charge a penalty risk premium for having sought Central Bank financing, I consider the effects of this premium in three different game theoretic scenarios, each with a different set of assumptions that could apply in different Economic settings. Depending on the specific environment, possible effects include dependence on Central Bank financing, bankruptcy, or an eventual return to the private financial markets for future funding.

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Advisor: Marjorie McElroy, Nir Jaimovich | JEL Codes: E58, G02, G21, G28, G32 | Tagged: Banking, Central Banking, Finance

Federal Outlays: The Effect of the President and Electoral Politics

By Michael Ge

The effect of congressional electoral politics on pork barrel spending is a well -studied phenomenon.
Likewise, presidential politics are receiving increased scrutiny. This paper aims to expand the
literature relating presidential electoral politics and the geographic distribution of federal funds on a
county level. It asks whether there is increased spending in the electorally-important counties in the
electorally-important states during and after a presidential elections. Results show that there are in
fact links between electoral importance and federal funding levels. However, results do not show a
trend in those results over different elections.

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Advisor: Marjorie McElroy | JEL Codes: A12, D72, E62, H50, H61 | Tagged: Distributive Politics, Pork Barrel, Presidential Elections, US Federal Budget

Auctions as an Alternative to Book Building in the IPO Process: An Examination of Underpricing for Large Firms in France

By John Mekjian

A relevant factor in determining the quality of an initial public offering (IPO) mechanism is the level and variability of underpricing that occurs. The percentage difference between the IPO price and the closing price after one day of trading is a common way to define the “underpricing” of the stock. Although companies may value a small amount of positive underpricing, they certainly want this to be controlled. Both extreme positive and extreme negative underpricing are undesirable for a company. Building off of a paper that found a lower mean and variability of underpricing for firms that use the auction IPO mechanism as opposed to the book building IPO mechanism, this paper argues that auctions are not disadvantaged when only large firms are considered. Although this paper finds that the book building mechanism controls underpricing better than the auction mechanism, the advantage disappears when considering only large firms. This analysis is relevant because, aside from two companies, only small companies have used the auction IPO mechanism in the United States. Due to the lack of auction IPOs in the United States, this paper uses French data in its analysis. By showing that large firms using the auction mechanism are not disadvantaged when compared to large firms using the book building mechanism, this paper attempts to encourage large firms in the United States to consider using the auction method for their IPOs.

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Advisor: James Roberts, Marjorie McElroy | JEL Codes: G12, G14, G20, G30 | Tagged: Auction, IPO, Underpricing

Job Choices, Flexibility and Maternal Labor Force Participation

By Samantha Cox

While there are countless studies concerning the effects of various variables on female labor force participation, there are still many unexamined intricacies involved in a woman’s choice to enter, re-enter or leave the work force. This paper attempts to extend on previous research and examine how the flexibility of a woman’s job influences her return to work after the birth of her first child. The findings support the results found in previous models which find a relationship between family size, hourly wage rate, other household income and age at first birth. The results further sought to address the elusive concept of culture’s effect on a woman’s labor decisions by using the woman’s religiosity. Most intrical to this research is the creation of two flexibility indices, one regarding occupation choice and one regarding industry choice, and the varying effect of these variables as well as the aforementioned explanatory variables over time. Using hazard analysis, a positive, significant relationship was established between the flexibility indices and the dependent variable when the influence of time was held constant. Also found was a positive relationship linking the likelihood of a woman returning to work after the birth of her first child, considering she has not already done so, with the interaction of the flexibility indices over time. Only the term interacting with the industry index was found to be significant.

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Advisor: Marjorie McElroy | JEL Codes: D1, J13, J24 | Tagged: Economics, Hazard/Survival Models, Industry, Labor Decisions, Maternity, Occupation, Women

A Further Exploration of Reverse Takeovers as an Alternative to Initial Public Offerings

By Matt LoSardo

In theory a reverse takeover (RTO) should be a viable alternative to initial public offerings (IPO) for private companies looking to access the public capital markets.  Since the IPO process can be very timely and include significant costs, both direct and indirect, we analyze reverse takeovers as an alternative method.  Recent papers have posed some similar questions, evaluating underpricing and market-timing, which we look to confirm.  However, our paper seeks to build on these analyses, with a particular focus on long-term returns for RTO stocks.  Overall we find that reverse takeovers can be successfully used instead of IPOs and should be sustainable long-term investments.

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Advisor: Edward Tower, Marjorie McElroy | JEL Codes: G12, G24, G32, G34 | Tagged: Finance, Initial Public Offering, Reverse Takeover

Incentives in Professional Tennis: Tournament Theory and Intangible Factors

By Steven Seidel

This paper analyzes the incentives of professional tennis players in a tournament setting, as a proxy for workers in a firm. Previous studies have asserted that workers exert more effort when monetary incentives are increased, and that effort is maximized when marginal pay dispersion varies directly with position in the firm. We test these two tenets of tournament theory using a new data set, and also test whether other “intangible factors,” such as firm pride or loyalty, drive labor effort incentives. To do this, we analyze the factors that incentivize tennis players to exert maximal effort in two different settings, tournaments with monetary incentives (Grand Slams) and tournaments without monetary incentives (the Davis Cup), and compare the results. We find that effort exertion increases with greater monetary incentive, and that certain intangible factors can often have an effect on player incentives.

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Advisor: Curtis Taylor, Marjorie McElroy | JEL Codes: J31, J33, L38 | Tagged: Compensation, Sports, Tournament Theory

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Michelle P. Connolly
michelle.connolly@duke.edu