Marriage Premium En Chile

Labor Economics

Is the wage of men and women significantly affected by marriage? Evidence for Chile

Francesca Bonomelli & Daniela Jara Facultad de Economía y Negocios, Universidad de Chile June 2011

Abstract While there is large evidence in other countries supporting the existence of marriage premium, no studies of this topic have been made for Chile. The paper examines whether marriagepremium for men exists, and if it so, what are the possible causes of it in the context of Chilean idiosyncrasy. When cross-sectional wage regression is estimated, married men appear to earn more than comparable single men, while, when panel data is used, marital status seems to have no significant effect on earnings. The results suggest that there’s no a significant effect of marriage premium forChile. Alternative explanations, as the existence of unobservable characteristics that are valued for employers and women, or that higher earnings men are most likely to get married, might justify the results in cross-sectional data.

1

Introduction

One of the great topics in labor economics is to determine what factors influence individual’s wages, for example, the relation betweenwages and education, wages and experience, wages and discrimination, wages and sex gender sex or gender?, etc. Studies in developed countries, especially in the United States, identify marriage as an important source of wage differentials. They have determined that marriage generates a premium in wages when comparing married men and equivalent single men. The gap has been estimated several times, andit seems that it ranges between 10% and 40% more salaries for married men1. In addition, only a few studies have found a positive and significant premium for women2. Some of the hypothesis that have been stated to explain this difference in the salaries are: Discrimination from employers in favor of married men, increase in productivity of married men due to non-household specialization,coincidence in characteristics that women and employers looks for in a man, and bias from women to men that receive higher salaries. The main difference between these arguments is that the first two, suggest that marriage generates a causal effect in the salaries of men, while the two final arguments imply that the marriage premium will arise from omitted variable bias. Some authors have found asignificant return to marriage for men using crosssectional data, while studies using panel data have reached different conclusions when controlling for fixed effects. Dougherty (2006) says that wage equations using cross-sectional data typically find an earnings premium in excess of 10 percent for married men. One of the hypotheses for the premium is that marriage facilitates specialization that enablesmarried men to become more productive than single men. Another is that the premium is attributable to an unobserved fixed effect, married men possessing qualities that are valued in the labor market as well as the marriage market, so when controlling for fixed effects the results change. Also, Korenman and Neumark (1991) make their specifications using pooled crosssectional data from the NationalLongitudinal Survey (NLS) Young Men Cohort and point out a positive correlation between marriage and salaries. They claim that when they control for unobserved individual fixed effects, the estimated premium is lower but still positive and significant. Also, there is Cornwell and Rupert (1997) which determine similar results using the same data (NLS) and controlling for fixed effects, concludingthat selection attenuates the marriage premium. Another study by Gray (1997) uses the same data in a first stage, and the National Longitudinal Survey of Youth (NLSY) in a second estimation. He compares the
Ginther D.& Zavodny M. (1998). “Is The Male Marriage Premium Due to Selection? The Effect of Shotgun Weddings on the Return to Marriage”. Federal Reserve Bank Of Atlanta. 2 Dougherty C. (2006)....