Are Increasing Earnings Associations between Partners of Concern for Inequality? A Comparative Study of 21 Countries

Abstract

Partners increasingly resemble each other in terms of earnings across Western countries. These increases in earnings similarity are often considered to be drivers behind growing income inequality between households. We argue that increases in earnings similarity do not necessarily lead to augmented inequality between households. Their overall effect depends on whether and how the processes that increase earnings similarity affect inequality through other pathways. Using data from the Luxembourg Income Study on 21 countries, we decompose changes over time in earnings inequality. We show that even though the correlation in earnings between partners increased in most countries, this only amplified inequality on some occasions. In several countries, increases in the earnings correlation are driven by general changes in employment rates. Given that these increases in employment equalized earnings across households through other pathways, the inherently connected increases in the earnings correlation are of less concern from an inequality perspective. In other countries, where increases in earnings similarity are produced by augmented similarity in earnings among dual-breadwinner couples or by selective changes in employment, increases in earnings similarity are of more concern for inequality between households.

Understanding Patterns and Trends in Income Mobility through Multiverse Analysis

“…We first consider the unequal investments pathway. In general, female labor market participation tends to go together with decreasing, not increasing, inequality between families (Harkness 2013; Lam 1997; Mastekaasa and Birkelund 2011; Nieuwenhuis, Van der Kolk, and Need 2017; Rosche 2022), and assortative mating contributes little to inequality between households (Boertien and Bouchet-Valat 2022). In Sweden, assortative mating has decreased or been largely stable (Henz and Jonsson 2003; Holmlund 2022), and income inequality was at its lowest point during the 1980s, when the youngest cohorts in our study grew up.…”

Explaining Gender-Specific Trends in Income Mobility: The Role of Education

“…Meanwhile, major shifts in educational distributions have been accompanied by various societal and institutional changes that removed barriers to women's careers, such as reduced gender segregation in the workplace and the expansion of dual-earner family policies. Women's labor force participation rates have been higher in Sweden than in other developed countries, both overall and across all levels of education (Boertien and Bouchet-Valat 2022;Evertsson et al 2009;OECD 2023). In light of this, it is relevant to ask how economic returns to education have changed for women compared to men in recent decades.…”

Dynamics of Wealth Homogamy in Couples

“…Finally, wealth homogamy could result from selective partnership continuation if partners with similar wealth levels are more likely to remain together. Differentiating these mechanisms helps to identify the causes of wealth homogamy and adds to the broader debate on changes in couple dynamics that led to increasing economic homogamy over the last century (Boertien & Bouchet-Valat, 2022;Gonalons-Pons et al, 2021;Gonalons-Pons & Schwartz, 2017).…”

“…While such research is common for education and income homogamy (e.g. Blossfeld, 2009;Boertien & Bouchet-Valat, 2022;Domański & Przybysz, 2007;Smits et al, 1998), multi-country studies on wealth homogamy are still lacking due to high data demands that require wealth to be measured at the individual level.…”