Is marriage poisonous? Are relationships taxing? An analysis of the male marital wage differential in Denmark.

1. Introduction

The word for "married" in Danish is the same as the word for "poison." The word for "sweetheart" in Danish is the same as the word for "tax." In this paper, we expand on the literature that documents a significant marital wage premium for men in the United States to see if a similar differential exists for married men in Denmark--or if the homonyms have perhaps less of a double meaning.

The existence of a marital wage premium for white men in the United States has been well documented empirically. Criticisms have focused on researchers' failure to clearly ascertain why wages change with marital status and on the imperfect nature of the data sets employed in the analysis, which generally contain relatively few men who have never married and incomplete marital histories. We use a large, 10-year panel sample of young Danish men in order to address these concerns. We have a complete relationship history for every respondent and a large fraction of never-married men. Substantial U.S.-Danish differences in marriage and childbearing behavior as well as in social norms regarding relationships and intrahousehold specialization are exploited to generate predictions regarding the Danish results that are tested in the empirical analysis. Of particular interest are the prevalence of cohabiting relationships in Denmark that allows us to test for wage differences by type of relationship, the evidence that Danish households are less specialized than U.S. households that allows us to explore the nature of the marital wage differential, and the very different pattern of childbirth and marriage that allows us to test for a distinct fatherhood effect. If wages are directly linked to productivity and if relationship type, intrahousehold specialization, and/or parenthood are linked with market wage differentials, policymakers should be apprised of the full cost of social legislation designed to alter these household choices.

2. Literature Review

The observation that married men earn more than men who have never married is not in itself surprising. Married men are typically older than never-married men, and older men have more experience, hence higher earnings, than their younger counterparts. Yet there also exists substantial evidence (for a review of the U.S. literature, see Ribar 2004) that married men earn more than never-married men with the same level of education, experience, and other observable characteristics. This fact can be explained in a number of ways.

Men who marry may be more productive throughout their lives than men who do not marry. This greater productivity makes them better providers and hence better marriage partners. This possibility can be explored econometrically either by simultaneously modeling both the decision to marry and wages (Nakosteen and Zimmer 1987; Chun and Lee 2001) or by using panel data on wages to estimate fixed-effects models that control for all unobservable, individual-specific, time-invariant factors (an early example being Korenman and Neumark 1991), or by using twins studies to control for twin-specific effects (Antonovics and Town 2004; Krashinsky 2004). Results indicate that there are differences between men who marry and men who do not. Korenman and Neumark (1991) conclude that 20% of the marital wage differential is attributable to individual-specific and time-invariant factors. Gray (1997) reports similar results using a cohort of men born in 1942-1952 but finds that for younger cohorts in the United States (born 1958-1965), all the estimated marital differential is attributable to fixed effects. Krashinsky (2004) finds that controlling for twin-specific effects explains the entire differential, but Antonovics and Town (2004) find that twin-based controls for selection yield even larger marital wage differentials.

The idea that marriage may change a man's productivity has also received some attention in the literature. One theoretical explanation is drawn from Becker (1991) and based on the fact that individuals in joint households are more able to specialize than those in single-person households. Men have historically specialized more in the market sector and women more in the home sector. This leaves men more time and/or energy to spend on market work after marriage. If this translates to higher productivity on the job, then their earnings should immediately rise. In this case, the level of wages will rise as men marry but fall back down if/ when the marriage ends. The marital wage effect will be temporary. Alternatively, men who marry may specialize by increasing their investment in job-related human capital. In this case, married men's wages may not rise immediately but will rise more rapidly, and wage growth--but not necessarily wage level--will fall if/when a marriage ends.

There is indirect empirical evidence from selectivity-controlled estimates supporting both these specialization mechanisms in the United States. Some researchers have found evidence that wages do rise more rapidly for married men (Korenman and Neumark 1991; Gray 1997 for older U.S. cohorts born 1942-1952; Stratton 2002), and some have found that wages both jump and rise faster following marriage (Daniel 1991; Hersch and Stratton 2000). However, this evidence is indirect because it does not actually capture behavioral changes in effort or time use.

Few data sets provide direct measures of productivity or time use. Evidence that married men receive more training than unmarried men is provided in Rodgers and Stratton (2005) but not found to explain the marital wage differential. Mehay and Bowman (2005) provide direct evidence of labor force productivity differentials between married and unmarried men but do not examine wages. A number of researchers have inferred that intrahousehold specialization will vary inversely with the employment status/hours of the wife and so compared marital wage differentials for men with employed wives to those for men whose wives are not employed (Loh 1996; Hotchkiss and Moore 1999). Results are mixed, with Loh finding men married to more educated wives faring better in the labor market and Hotchkiss and Moore finding results that differ depending on the husband's occupation. More direct evidence on men's housework activities suggests that in the United States, while men's wages are negatively related to their housework time, controlling for men's time on housework does not explain the marital wage differential (Hersch and Stratton 2000).

Other explanations for a male marital wage differential include discrimination, marriage as a behavior-altering state that focuses men on more productive activities, and a compensating wage differential argument that suggests that married men favor income over other job characteristics (for a more detailed summary, see Ribar 2004). Parenthood also may generate effects if becoming a parent changes men's behavior on the job. Most marital wage researchers control for the presence of children in the household and fail to find a significant impact (see, e.g., Korenman and Neumark 1991; Loh 1996). Mehay and Bowman (2005) find mixed empirical results but conclude that marital duration has an impact on performance that is independent of the presence of children. One exception is Cornwell and Rupert (1997), who find that fathers earn about 5% more than nonfathers in the United States and hypothesize that, like married men, fathers modify their time allocation decisions in a way that increases their market productivity. Generally, however, in the United States, it may be difficult to distinguish between marriage and fatherhood, as the latter so often follows fairly closely after the former.

There are a number of problems with both the evidence and the theory behind the marital wage differential as presented to date. One concern with the selection hypothesis is that virtually all men eventually marry. In the United States, 63% of all white, non-Hispanic women are married by age 25, 81% by age 30 (Bramlett and Mosher 2002). Those who never marry are but a small and likely unusual fraction of the population.

Not only is this a problem with the hypothesis, but it also poses problems empirically, as a marital wage differential can be identified only by comparing married and not-married individuals. Samples including persons of all ages are unlikely to include many never-married men. Estimates based on youth cohorts have a better chance of including more first-time marriages, but even these samples include a substantial fraction of men who are married when first observed (78% in Korenman and Neumark's 1991 seminal work, 76.2% in Gray 1997, 66.2% in Hersch and Stratton 2000). In part this is due to sample selection criteria that restrict the sample to men who have completed their education, but the result is that, in general, estimates of the marital wage differential rely a great deal not on first marriages but on separation/divorce and remarriage for identification of the marital wage premium (for a further discussion, see Cornwell and Rupert 1997).