The individual dynamics of wage income in France during the crisis

Abstract

The uncertain nature of future income limits the ability of agents to smooth their consumption over time. Variation in this uncertainty can thus bring about variation in well-being. We study the evolutions of the uncertainty on wage income in France before and over the course of the crisis of 2008 drawing on longitudinal administrative data. Using a non-parametric method, we estimate the magnitude and form of this uncertainty and show that they depend on past wage income. This uncertainty is broken down into wage and working time, and according to the mobility of the wage earners. During the crisis, the magnitude of this uncertainty on future wage income increases slightly, and its downward asymmetry is stronger at both ends of the wage income scale: with this uncertainty, unfavourable evolutions have a bigger impact during the crisis than in the preceding period. This is explained by a heightened probability of unfavourable individual evolutions in terms of working time for the lowest-paid workers, and in terms of wage for the highest-paid. Mobility is more frequent during the crisis but the uncertainty associated with it is lower than over the preceding years.

The Motherhood Wage and Income Traps

“…Intuitively, the effort shock generated by motherhood might be less severe for a highly educated woman because it is partially absorbed by the human capital she has accumulated before her maternity leave. Pora and Wilner (2019) use French administrative data and document the heterogeneity of the consequences of childbirth along the distribution of pre-childbirth wages; their evidence is fully in line with our results. However, the fact that women with low SES are more likely to enter the wage trap does not necessarily imply that they also suffer the higher child penalty overall.…”

Household specialization and the child penalty in the Netherlands

“…In previous work, Angelov et al (2016) ; Chung et al (2017) and Pora and Wilner (2019) concluded that their findings are consistent with household specialization. Angelov et al (2016) and Chung et al (2017) base this on the finding that the within-couple earnings gap increases more after the birth of the first child if the father has a higher earnings potential, while Pora and Wilner (2019) base it on the finding that higher-earning women reduce their labor supply (and subsequently earnings) less after childbirth. Our results from analyses 19 Online appendix table B2 shows results for the three measures of earnings potential discussed in online appendix section B.…”

“…The evidence regarding this channel is, however, mixed. Angelov et al (2016) ; Pora and Wilner (2019) and Chung et al (2017) find support for it, while Andresen and Nix (2020) ; Kleven et al (2021) and Rosenbaum (2019) do not. A possible reason for this are differences in relevant institutions regarding for example the possibilities to adjust working hours or to use formal child care for very young children.…”

“…3 Angelov et al (2016) find that the magnitude of the within-couple earnings gap depends on the relative earnings within the family. Relating the child penalty to women's pre-childbirth rank in the distribution of hourly wages, Pora and Wilner (2019) conclude that child penalties arise from decisions based on specialization gains rather than on preferences or gender norms. Chung et al (2017) find that the within-couple earnings gap increases more for couples where the male spouse has a higher education than the female partner.…”

“…Our second contribution to the literature is that we analyze labor market trajectories of both partners in relation to various measures of their relative earnings potential. This is more comprehensive than approaches which restrict attention to the within-couple earnings gap ( Angelov et al, 2016;Chung et al, 2017 ) or to women's pre-childbirth rank in the wage distribution ( Pora and Wilner, 2019 ), and will therefore provide a broader picture of the role of household specialization in explaining the child penalty.…”