The Economist has a nice summary of a new paper by Marianne Bertrand, Emir Kamenica, and Jessica Pan, which is forthcoming. An excerpt of the Economist article is below.
The paper offers some hints as to why women who could outearn their husbands choose not to work at all, or to work less. For instance, norms affect the division of household chores, but economically in the wrong direction. If a husband earns less than his wife, she might rightfully expect him to take on some additional responsibilities at home. In reality, however, if she earns more, she spends more time taking care of the household and their children than otherwise similar women in comparable families, who earn less than the husband. One wonders whether such women feel compelled to soothe their husbands’ unease at earning less.
I’m in the midst of reading the paper right now, and my first thought was that this is an incredible stretch. In econometrics, a significant problem in estimation is the problem of unobserved heterogeneity. It makes sense to think that on average, married women are different than single women, that women who choose to have children are different than women who choose not to have children, and finally, it should makes sense that men who marry women who earn more than them are likely different than men who marry women who earn less than them.
I can certainly imagine that some women would be inclined to “soothe their husbands’ unease at earning less,” but it seems that the men who were particularly sensitive to such things wouldn’t marry a woman with greater income or greater earning potential. This is, in fact, what they find, that women who work are less likely to marry a man who earns less, and thus partially explains the decline in marriage rates in the US. It also drives much of their results on divorce, which they see as arising out of the unequal division of labor in the household due to this “soothing effect.”
It appears to be a very thorough paper, though I’m skeptical of the instrument–men’s and women’s industry-specific wage distributions–being uncorrelated with unobserved characteristics that lead to more gender-equitable matches.
Based on the industry composition of the state and industry-wide wage growth at the national level, we create sex-specific predicted distributions of local wages that result from aggregate labor demand that is plausably [sic] uncorrelated with characteristics of men and women in a particular marriage market.
This is the instrument used by Aizer (2010) in her paper on the effect of an increase in women’s wages on rates of domestic violence. Though a subtle distinction, I find her use of the instrument much more plausible due to the much lower prevalence of hospitalization-inducing violent events versus marriages where the woman earns more, which the Bertrand paper cites as about one quarter of the marriages in their sample. It seems that these wage distributions actually would be correlated with the characteristics of men and women in a labor/marriage market.