The evolution of the earnings gap within couples over time – a life-course perspective

Research on earnings inequalities in heterosexual couples has shown that women tend to earn substantially less than their male partners (e.g.Bianci et al. 1999; Estevez-Abe 2008; Dotti-Sani 2015) and also that these inequalities have been quite consistent over time and resistant to institutional change (Dieckhoff et al. 2020). These inequalities are problematic as they impact women’s future labour market outcomes. We know from existing work that women who earn less than their partner are more likely to drop out of the labour market (Shafer 2011); switch from full-time to part-time (Dieckhoff et al. 2016) and less like to advance their careers (Bröckel et al. 2015). Earnings inequalities in couples are hence not only the result of inequalities in the labour market, they can also further enhance them. It is thus important to understand these inequalities and how these evolve over the life-course. In this effort, we investigate using the German Socio-economic Panel (SOEP) 1992-2018 how earnings inequalities evolve with duration of couple’s cohabiting relationships based on German panel data. We also examine whether different patterns can be observed for different cohorts.

In our analysis we define the partner income gap (PIG) as the difference in monthly earnings between cohabiting partners (including zero earnings) and differentiate three types of couples: (1) those who start cohabiting childless and then become parents; (2) those who already have a child from the start of their cohabitation; and (3) those who remain childless.

We observe that there is an income gap (to the female partner’s disadvantage) in all 3 couple “types” at the outset of the cohabitation phase of their relationship. The results show that for those who stay childless and those who started cohabitation with a child, the partner pay gap does not increase or decrease over time – the persistence of the PIG over time in these groups is notable. For those couples who started childless and then became parents, women’s disadvantage grows with relationship duration. Comparing the findings in East and West, we find not only that the income gaps are substantially less pronounced in the East, but also that the growth of the gap in couples who become parents during the observation time is hardly growing over time.

In a second step, following on from Brüderl et al. (2019) the paper also provides an analysis of the effect of having children as a ‘causal pathway’ on Y. We do this through the application of a fixed-effects regressions with a dummy impact function of the effect of having a child on the partner income gap.  The findings of these analyses again confirm the strong effects of having a child on the income gap. We also observe that cost of a child, in terms of partner income gap, varies by cohort, and it is declining in younger cohorts.

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