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The timing and manner in which families are formed and dissolved in the United States has changed dramatically in the later part of this century. Concurrent with increases in the age at first marriage, the age at which individuals begin childbearing and the rate at which marriages end, there has been a dramatic increase in the rate at which individuals choose to enter a non-marital union — cohabitation. This form of living arrangement has increasingly become an antecedent to marriage. A number of studies have found that married couples who began their relationship by cohabiting in a marriage-like relationship have a higher risk of marital dissolution. An important unresolved question is whether this relationship is due to self-selection of more dissolution-prone individuals into cohabitation before marriage. In this paper the authors explicitly address the issue of the endogeneity of cohabitation before marriage in its effects on the hazard of marriage dissolution. To address this problem, they use newly developed econometric methods that permit the estimation of related simultaneous hazard processes and qualitative outcomes. The empirical analysis includes individual and time-varying covariates, control for multiple forms of duration dependence, and, crucial for the simultaneous estimation, controls for unobserved heterogeneity. The endogeneity of one outcome on another is controlled for by allowing the unobserved heterogeneity components to be correlated across the various decisions that are modeled. These methods are applied to data from the National Longitudinal Study of the High School Class of 1972. The authors find significant heterogeneity in both behavioral processes and evidence of self-selection into cohabitation.
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