Strong families, prosperous states: Do healthy families affect the wealth of states?

American Enterprise Institute 19 October 2015
Poverty Studies, Society and Culture
Economics has its roots in the Greek word oikonomia, which means the “management of the household.” Yet economists across the ideological spectrum have paid little attention to the links between household family structure and the macroeconomic outcomes of nations, states, and societies. This is a major oversight because, as this report shows, shifts in marriage and family structure are important factors in states’ economic performance, including their economic growth, economic mobility, child poverty, and median family income.

Strong Families, Prosperous States documents four key sets of facts about the links between families and the economic welfare of states across the country:
•Higher levels of marriage, and especially higher levels of married-parent families, are strongly associated with more economic growth, more economic mobility, less child poverty, and higher median family income at the state level in the United States. When we compare states in the top quintile of married-parent families with those in the bottom quintile, we find that being in the top quintile is associated with a $1,451 higher per capita GDP, 10.5 percent greater upward income mobility for children from lower-income families, a 13.2 percent decline in the child poverty rate, and a $3,654 higher median family income. These estimates are based on models that control for a range of factors—from the educational and racial composition of a state to its tax policies and spending on education, and to unchanging characteristics of states—that might otherwise confound the family-economy link at the state level.
•The share of parents in a state who are married is one of the top predictors of the economic outcomes studied in this report. In fact, this family factor is generally a stronger predictor of economic mobility, child poverty, and median family income in the American states than are the educational, racial, and age compositions of the states.
•The state-level link between marriage and economic growth is stronger for younger adults (ages 25–35) than for older adults (36–59). This suggests that marriage plays a particularly important role in fostering a positive labor market orientation among young men.
•Violent crime is much less common in states with larger shares of families headed by married parents, even after controlling for a range of socio-demographic factors at the state level. For instance, the violent crime rate (violent crimes per 100,000 people) sits at 343 on average for states in the top quintile of married parenthood, whereas those in the bottom quintile average a rate of 563. This is noteworthy because high crime rates lower the quality of life and real living standards and are associated with lower levels of economic growth and mobility.

Given the importance of strong families for the economy, we propose four policy ideas to strengthen the economic and cultural foundations of marriage and family life in states across the country:

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