Economists have contributed a great deal of research, both theoretical and empirical, to the study of marital formation and dissolution. Many empirical examinations of marriage and divorce rates exist based on Becker's seminal contributions to the literature. All of these divorce studies are single equation models, with female earnings assumed exogenous. As discussed by Becker (1981), however, causality may run in the opposite direction as well: the divorce rate may influence female earnings. This paper estimates a simultaneous equations model in which divorce rates and female earnings are the jointly endogenous variables. Data are by state, for 1960, 1970, 1980 and 1990. The state-wide divorce rate equation is an extension of Waters and Ressler (1999), and the specification of a state-wide earnings equation follows standard human capital theory. The specification of joint endogeneity between female earnings and the divorce rate allows valid inferences to be made regarding the effect of female earnings on divorce for the first time. Most previous single equation studies of divorce have found that increases in female earnings significantly increase divorce rates. A simultaneous equations model will allow inferences to be made regarding the possibility of joint determination, which may cause a reevaluation of previous results.

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Clarke and Strauss (1998), among others, have determined that the magnitude of financial transfers to unwed mothers is positively related to out‐of‐wedlock fertility rates. Increases in fertility rates must be accompanied by increases in unprotected sex, and unprotected sex allows for the spread of sexually transmitted diseases. We hypothesize that states with relatively greater welfare payments under the old Aid to Families with Dependant Children (AFDC) program are associated with higher rates of heterosexually contracted human immunodeficiency virus (HIV). Using data for 26 reporting states from 1993 to 1996, our weighted instrumental variables estimates with clustered standard errors are consistent with our hypothesis. (JEL D1, I38)

Economists have long studied the determinants and effects of income transfers. This article examines an indirect effect of welfare payments on participating individuals: an increase in the incidence of sexually transmitted disease (STD) rates.Several studies have found a significant and positive link between the size of welfare benefits and out-of-wedlock fertility rates. Higher welfare payments reduce the cost of bearing and raising a child, and thus reduce the full cost of engaging in unprotected sex. An unintended consequence of unprotected sex is exposure to contagious diseases. This implies that states with higher welfare payments per child will experience higher rates of STDs.We test this hypothesis using statewide data on the incidence of three types of bacterial STDs, chlamydia, gonorrhea, and syphilis, for the years 1994 through 1998. The empirical specification is based on the standard microeconomic model of utility-maximizing behavior. The included explanatory variables are demographic proxies reflecting differences in state population characteristics. These characteristics capture unobservable or intrinsically unmeasureable differences in the perceived costs and benefits of engaging in unprotected sex.The explanatory variable of primary interest is the size of the real welfare payment per recipient. Our empirical results indicate that states with higher real welfare payments are associated with greater rates of STDs.