Feedback loops on regional partner markets

Jan-Christoph Janssen, University of Cologne
Michael Wagner, University of Cologne

This paper investigates the changes of marriage stability in Germany between 2003 and 2012. We analyze aggregate regional data to model feedback loops between the population structure and the divorce rate for German labor market regions (n=253). The regional sex ratio - the ratio of available men to 100 available women - constitutes partner market opportunities as an essential component of the exit costs of current marriages. On the one hand, we expect that the more alternative partners are available, the higher the divorce rate. And rising divorce rates, on the other hand, should increase the availability of alternative partners. Therefore, the sex ratio and the divorce rate are both endogenous, which implies that unidirectional estimates would suffer from endogeneity bias. This paper takes advantage of the mutual endogeneity to model a self-perpetuating process. A simultaneous equation model ensures unbiased estimates for both directions. Preliminary results of a cross sectional analysis for the year 2011 indicate a mutual interdependence of regional divorce rates and imbalanced sex ratios.