Education and Union Formation as Simultaneous in Italy and Spain

Both the time spent in education and the age at first union have substantially increased in Italy and Spain. We show that exit from education and union formation are simultaneous processes. We use the European Community Household Panel providing standardised information. The effect of unobserved characteristics on both processes is controlled for using simultaneous hazard modelling. We find that the exit from education increases the risk of entering the first union, and that individual unobserved characteristics influence the occurrence of the two processes simultaneously. Ignoring these characteristics would overestimate the effect of exit from education on union formation.