Abstract

It is demonstrated that family policies are an important aspect of the institutional context of earnings inequality among coupled households. Although seldom integrated into prominent analyses of economic inequality, women’s earnings are consistently found to reduce relative inequality among households. This means that family policies, as well-known determinants of women’s employment and earnings, are important contextual determinants of economic inequality. Using Luxembourg Income Study data from 18 OECD countries in the period 1981–2008, this study demonstrates that women have higher earnings, and that their earnings reduce inequality among coupled households more in institutional contexts with generous paid leave and public childcare. We found no sizeable association between financial support policies, such as family allowances and tax benefits to families with children, and the degree to which women’s earnings contribute to inequality among coupled households. Family policy arrangements that facilitate women’s employment and earnings are associated with less economic inequality among coupled households.

Nieuwenhuis, R., Need, A. & Van der Kolk, H. (2018). Family policy as an institutional context of economic inequality. Acta Sociologica. Forthcoming, online first: http://journals.sagepub.com/doi/full/10.1177/0001699318760125

In this period, women’s share of household earnings grew, spouses’ earnings became more strongly and positively correlated in various countries, and inequality in women’s earnings was reduced. Inequality in household earnings increased due to the rising correlation between spouses’ earnings, but was reduced more by the decline of inequality in women’s earnings.

Had women’s earnings remained unchanged since the 1970s and 1980s, inequality in household earnings would have been higher around 2010 in all observed OECD countries. Household inequality was reduced least by trends in women’s earnings in countries with a long history of high female labor force participation, such as Finland (3% reduction) and Sweden (5%), and most in countries that observed a stronger increase in female labor-force participation in recent decades such as Spain (31%) and the Netherlands (41%).

As more countries are reaching a plateau in the growth of women’s employment and earnings, the potential for further stimulating women’s employment and earnings to counter both women’s and household inequality seems to be increasingly limited.

Nieuwenhuis, R., van der Kolk, H., & Need, A. (2017). Women’s earnings and household inequality in OECD countries, 1973–2013. Acta Sociologica, 60(1), 3–20. http://doi.org/10.1177/0001699316654528

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.

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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.