On the marriage wage premium

Abstract

We use a novel instrument based on local social norms towards marriage to present a new finding: being married has a positive causal effect on the wages of both men and women. Despite the striking changes in the labor market and the composition of families over the past decades, the men’s premium has only slightly diminished over time. Conversely, we document that the effect of being married on women’s wages has evolved from a penalty to a premium. The time allocation patterns of married couples indicate that the men’s premium can be explained as a byproduct of household specialization `a la Becker (1985, 1993). However, the degree of specialization between spouses has decreased over time, leading married women to work almost as many hours as their single counterparts and inducing the disapearance of the married penalty for women. We find evidence indicating that the women’s premium of today can be explained by their job-search behavior. The data is consistent with one of the channels in the theory by Pilossoph and Wee (2021): because of income pooling with their husbands, married women have a higher reservation wage, which allows them to select better paid jobs than their single counterparts.

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ORCID for Brendon Mcconnell: orcid.org/0000-0001-6029-9479

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