04 Jan

Proposition 4: The conditions for women’s earnings to increase inequality between households are hard to meet

The conditions for women’s earnings to increase inequality between households are hard to meet.

With women’s increasing participation on the labour market, the question has often been raised how their earnings have affected earnings inequality between households. Early during my sociology training I learned that the inequality between households would be bigger than inequality between individuals. I thought it made sense, as coupled household with two earners can accumulate more resources (e.g. earnings) than a single person (household) can. Add educational homogamy to the mix, and there is a strong reason to expect women’s earnings to increase inequality between households. Hence, I was not surprised when I read Esping-Andersen’s statement that the “conditions required for an equalizing effect [of women’s earnings] are quite steep”.

It is, however, a “common misconception” (Lam, 1997) that a positive correlation between spouses’ earnings is a sufficient condition for women’s earnings to increase inequalities between households. Instead, the contribution of women’s earnings to inequality between households depends on the correlation between spouses’ earnings, the earnings inequality among women (relative to inequality among men), and the share of women’s earnings in total household earnings. It turned out, that the correlation between spouses’ earnings was positive, but not high enough for women’s earnings to increase the inequality between households.

So, that is why this Chapter concludes by stating that the conditions for women’s earnings to increase inequality between households are hard to meet.

The abstract of this Chapter reads:

In this Chapter we show that women’s earnings attenuate inequality between coupled households, even though the earnings of spouses are positively correlated. We use data from the Luxembourg Income Study (LIS, 2013) on 572,222 coupled households, covering the period from 1981 to 2005 in 18 OECD countries. Three trends are described. Firstly, over time women’s earnings increasingly contributed to total household earnings, thereby increasing equality within households. Secondly, the positive correlation between spouses’ earnings increased over time. Thirdly, earnings inequality among women declined. With a counter-factual decomposition technique on earnings inequality, we show that the combined effect of these trends was that women’s earn- ings increasingly attenuated earnings inequality between households. The trend towards women’s earnings increasingly attenuating the inequality between households was mainly driven by decreasing inequal- ity among women. If inequality among women had not declined as it did in recent decades, inequality between households would have been 25% higher than it actually was in 2005.

This is a series on the 10 propositions that are part of my PhD dissertation. These propositions are a Dutch tradition to highlight key findings of a dissertation and some additional insights by the author. My dissertation is titled “Family Policy Outcomes: Combining Institutional and Demographic Explanations of Women’s Employment and Earnings Inequality in OECD countries, 1975-2005″ and I will defend my dissertation on January 10 2014. So, this series is also a count down. Find out more about my dissertation.

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