Wage Premium and Wage Penalty in Marriage versus Cohabitation

Abstract

Empirical evidence has shown that married men generally earn more and married women earn less than their unmarried counterparts. However, the control group of “not married” differs between studies, over time and between countries, such that the message remains somewhat fuzzy. It is not clear whether the type of union or the fact of being in a union is responsible for these wage penalties and premiums. This article aims to analyze whether marriage pays more than cohabitation in a country such as France, where cohabiting and married partnerships have both coexisted for years. Thanks to a rich dataset with information on both the marital and work history of both partners, we are able to estimate the effect on hourly wages of being married relative to being in a cohabiting union. Taking into account selections into marriage (rather than cohabitation) and into the labor market with a possible differential in sharing of paid work within the couple, our results show that the men’s marriage premium is due entirely to a positive selection into marriage. While the process of within-couple marital specialization strongly reduces a woman’s hourly wage, there is no evidence of any additional marriage penalty for women. The within-couple gender wage gap is similar for married and cohabiting partners, after controlling for selection into marriage.