New Evidence On The Allocation Of Work And Income Within Married And Unmarried Couples

Research published in the March 2010 Economic Journal sheds light on the division of labour within households as well as how men and women share total household income. Among the findings of the analysis of data on both married and unmarried couples in the Netherlands by Professor Hans Bloemen:

  • A wage increase for a household member has different effects for men and women.
  • For wives, a wage increase gives them a stronger bargaining position over total household income and their share grows. They work longer hours – and so do their husbands to keep up with them.
  • For husbands, a wage increase means higher income for both partners. As a result, wives put in fewer hours of paid work – and more hours of unpaid work at home.
  • For men in unmarried couples, a wage increase leads to more hours of paid work.
  • Married men with above average wage rates will use part of their higher wages to allow themselves more leisure time.
  • Unmarried women do better than married women in income-sharing within couples.

These results have wider implications for the rise of dual earner households and women''''s position within them. Given the rise in female education levels, women''''s wage potential has increased.

As a result, not only will the proportion of dual earner couples in the population gradually increase, but within these couples, the financial position of women will be stronger, while men can rely less on their partner to perform domestic chores.

In other words, partners within couples will get less dependent on each other, the position of women within households will improve and men will need to take more care of themselves.

But while increasing female education levels may improve the average position of women, low-educated women remain a concern for policy-makers.

For low-educated women, traditional role patterns are more likely to persist: low-educated women with high-income partners receive support from their partners to keep their participation in market work low, while low-educated women with a low-income partner work to keep up the level of total household income, rather than to improve their own position.

The research models how many hours the partners within a couple (married or unmarried) choose to work each week, distinguishing two stages in the decision:

  • First, the partners agree on an income-sharing rule that describes how the total household''''s income is allocated between man and woman. According to this rule, partners do not just pool together their individual incomes, but the share they get is influenced by their own individual potential wage. Thus, wage rates not only represent earnings potential, but they also influence the household members'''' bargaining position in the intra-household allocation of income.
  • Second, each household member decides how many hours he or she will work, taking into account this income-sharing rule.

In married couples, the effect of a wage increase of a household member has a different effect on the position of the spouse, depending whether it is the husband''''s or the wife''''s wage that increases.

Higher wage rates for women increase their bargaining position within the household. They receive a higher share of the total household income at the expense of their husbands. Thus, her consumption increases, while his goes down. Women with higher wage rates work more hours, and so do their husbands, to catch up with their wives.

A man with a higher wage rate transfers part of his wage increase to his wife. Therefore, the incomes of both the husband and the wife increase. As a result of the higher income, the wife supplies fewer hours of paid work in the labour market. An interpretation of this is that the husband uses his higher wage to give his wife the opportunity to do more unpaid work at home.

Most men in unmarried couples will supply more hours of paid work if their wage rate is higher. But married men with above average wage rates will use part of their higher wages to allow themselves more leisure time.

Unmarried women have a better position in the income-sharing process than married women. In unmarried couples, partners tend to share equally non-wage-related income sources, such as transfers or interest income, and they both allow themselves more leisure time if there is an increase in such other income sources.

In married couples, other income sources are mainly assigned to the husband, and he will be the one enjoying more leisure hours.'

''An Empirical Model of Collective Household Labour Supply with Nonparticipation'' by Hans Bloemen is published in the March 2010 issue of the Economic Journal.