Income Inequality and Early Nonmarital Childbearing

Using individual-level data from the United States, we empirically investigate the role of lower-tail income inequality in determining rates of early nonmarital childbearing among low socioeconomic status (SES) women. We present robust evidence that young low-SES women are more likely to have a nonmarital birth when they live in places with larger lower-tail income inequality, all else held constant. We calculate that differences in the level of inequality are able to explain a sizeable share of the geographic variation in teen fertility rates. We propose a model of adolescent decision-making that facilitates the interpretation of our results.