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The Impact of Early-Life Debt on Household Formation: An Empirical Investigation of Homeownership, Marriage and Fertility
Shand, Jennifer M.

2008, Doctor of Philosophy, Ohio State University, Economics.
This dissertation employs data from the Survey of Consumer Finances 1992, 1995, 1998, 2001 and 2004 rounds to examine the impact that debts accrued early in life, particularly college loans and credit card balances, have on young households after leaving college, focusing on their decisions of homeownership, entry into marriage, and fertility. Chapter 4 delineates a new avenue through which debt may influence young household behavior. I develop a model in which households optimize subject to two constraints, a typical budget constraint and a credit constraint. I use a bivariate probit specification to account for this credit constraint effect and confirm that in the most recent and earliest rounds of the SCF data educational debt lowers the probability of homeownership, although I cannot conclude that this reduction in homeownership is due to the credit constraint effect. I also show that credit card debt is positively related to homeownership in the most recent round and arises through a relaxation of the budget constraint facing households. Chapter 5 considers to what extent debt influences the marriage rates of young households. This chapter bridges the literature between risk-aversion in marriage and financial stress and marital dissolution. I take a novel approach to the conception of risk aversion by hypothesizing that marriage is the risky endeavor when a potential partner brings debt into the relationship, in contrast to the standard assumption that remaining single is risky and marriage provides insurance. I outline theoretical considerations that illustrate a scenario in which marriage is the risky option. The results support the hypothesis that risk is a consideration in union formation and that consumer debt is negatively correlated with marriage rates.
The final chapter examines how debts influence fertility and family size. I hypothesize that the presence of debt in the household budget constraint will produce delays in fertility as there is a tradeoff between own debt and child quality, in addition to the traditional Becker-Lewis type tradeoff. The data indicate that consumer debts may lead to smaller family size and educational debt leads to pronounced delays in entering fertility, beyond the delays produced by more education, in the most recent round of the SCF.
Lucia Dunn, PhD (Advisor)
Steven Cosslett, PhD (Committee Member)
Trevon Logan, PhD (Committee Member)
220 p.

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Shand, J. (2008). The Impact of Early-Life Debt on Household Formation: An Empirical Investigation of Homeownership, Marriage and Fertility. (Electronic Thesis or Dissertation). Retrieved from https://etd.ohiolink.edu/

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Shand, Jennifer. "The Impact of Early-Life Debt on Household Formation: An Empirical Investigation of Homeownership, Marriage and Fertility." Electronic Thesis or Dissertation. Ohio State University, 2008. OhioLINK Electronic Theses and Dissertations Center. 22 Apr 2018.

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Shand, Jennifer "The Impact of Early-Life Debt on Household Formation: An Empirical Investigation of Homeownership, Marriage and Fertility." Electronic Thesis or Dissertation. Ohio State University, 2008. https://etd.ohiolink.edu/

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