Abstract
Many studies have focused on how demographic dynamics, such as changes in marriage patterns and the increasing share of households headed by a single adult, may contribute to rising earnings inequality. Here we instead ask how demographic differences between countries may underpin differences in household earnings inequality between them, concentrating on economic homogamy and the proportion of households headed by a single woman and by a single man. We use data on 28 OECD countries from the 2016 wave of the Luxembourg Income Study, and develop a new inequality decomposition approach based on half the squared coefficient of variation (HSCV). We find that variation between countries in the specified demographic factors can account for just over 40% of the variation between countries in inequality in household labour earnings, with the proportion of households headed by a single woman playing the largest role. The associations between labour earnings inequality and these demographic components are consistent across countries, with little variation in how each is related to overall inequality. Although by far the largest driver of cross-national inequality relates to the earnings of partnered men, counterfactual analysis suggests that relatively small changes in these demographic variables can indeed affect inequality.
Data Availability
The data employed are from datasets available to researchers, primarily via the Luxembourg Income Study.
References
Albertini, M.: Equalizing or not? The effect of changing household characteristics on income inequality. Eur. Sociol. Rev. 24(3), 285–298 (2008)
Boertien, D., Permanyer, I.: Educational assortative mating as a determinant of changing household income inequality: A 21-country study. Eur. Sociol. Rev. 35(4), 522–537 (2019)
Bourguignon, F., Ferreira, F.H., Leite, P.G.: Beyond Oaxaca-Blinder: Accounting for differences in household income distributions. J. Econ. Inequal. 6(2), 117–148 (2008)
Bover, O.: Wealth inequality and household structure: US vs Spain. Rev Income Wealth 56(2), 259–290 (2010)
Bradshaw, J., Keung, A., Chzhen, Y., Nieuwenhuis, R., Maldonado, L.: Cash benefits and poverty in single-parent families. In: The Triple Bind of Single-Parent Families, p 337. Policy Press, Bristol (2018)
Brady, D., Leicht, K.T.: Party to inequality: Right party power and income inequality in affluent Western democracies. Res Soc. Stratific. Mobil. 26(1), 77–106 (2008)
Breen, R., Salazar, L.: Has increased women’s educational attainment led to greater earnings inequality in the United Kingdom? A multivariate decomposition analysis. Eur. Sociol. Rev. 26(2), 143–157 (2010)
Breen, R., Salazar, L.: Educational assortative mating and earnings inequality in the United States. Am. J. Sociol. 117(3), 808–843 (2011)
Burtless, G.: Effects of growing wage disparities and changing family composition on the US income distribution. Eur. Econ. Rev. 43(4–6), 853–865 (1999)
Cancian, M., Schoeni, R.F.: Wives’ earnings and the level and distribution of married couples’ earnings in developed countries. J. Income Distrib. 8(1), 45–61 (1998)
Cancian, M., Reed, D.: Assessing the effects of wives’ earnings on family income inequality. Rev. Econ. Stat. 80(1), 73–79 (1998)
Cancian, M., Reed, D.: Changes in family structure and changes in poverty are closely related. Single-mother families. In: Changing Poverty, Changing Policies, p. 92. Russell Sage Foundation, New York (2009)
Cancian, M., Danziger, S., Gottschalk, P.: The changing contributions of men and women to the level and distribution of family income, 1968–88. In Poverty and Prosperity in the USA in the Late Twentieth Century (pp. 317–354). Palgrave Macmillan, London (1993)
Chancel, L., Piketty, T., Saez, E., Zucman, G.: World Inequality Report 2022. World Inequality Lab, Paris (2021)
Chen, W.H., Förster, M., Llena-Nozal, A.: Demographic or labour market trends: What determines the distribution of household earnings in OECD countries? OECD J.: Econ. Stud. 2013(1), 179–207 (2014)
Chevan, A., Stokes, R.: Growth in family income inequality, 1970–1990: Industrial restructuring and demographic change. Demography 37(3), 365–380 (2000)
Cowell, F.A.: Measurement of inequality. Handb. Income Distrib. 1, 87–166 (2000)
Cowell, F., Karagiannaki, E., McKnight, A.: Accounting for cross-country differences in wealth inequality. Rev. Income Wealth 64(2), 332–356 (2018)
DiNardo, J., Fortin, N.M., Lemieux, T.: Labor Market Institutions and the Distribution of Wages, 1973–1992: A Semiparametric Approach. Econometrica 64(5), 1001–1044 (1996)
Esping-Andersen, G.: Sociological explanations of changing income distributions. Am. Behav. Sci. 50(5), 639–658 (2007)
EU Policy Department for Citizen’s Rights and Constitutional Affairs, Directorate-General for Internal Policies: The situation of single parents in the EU. https://www.europarl.europa.eu/RegData/etudes/STUD/2020/659870/IPOL_STU(2020)659870_EN.pdf (2020)
Fields, G. S.: Accounting for income inequality and its change: A new method, with application to the distribution of earnings in the United States. In: Worker Well-Being and Public Policy, pp. 1–38. Emerald Group Publishing Limited, Bingley (2003)
Fields, G.S., Yoo, G.: Falling labor income inequality in Korea’s economic growth: Patterns and underlying causes. Review of Income and Wealth 46(2), 139–159 (2000)
Fortin, N., Lemieux, T., Firpo, S.: Decomposition methods in economics. In: Handbook of Labor Economics, vol. 4, pp. 1–102. Elsevier, Amsterdam (2011)
Gonalons-Pons, P., Schwartz, C.R.: Trends in economic homogamy: changes in assortative mating or the division of labor in marriage? Demography 54(3), 985–1005 (2017)
Greenwood, J., Guner, N., Kocharkov, G., Santos, C.: Marry your like: Assortative mating and income inequality. American Economic Review 104(5), 348–353 (2014)
Gronau, R.: Inequality of family income: do wives' earnings matter?. Population and Development Review, 119–136 (1982)
Grotti, R., Scherer, S.: Does gender equality increase economic inequality? Evidence from five countries. Res. Soc. Stratific. Mobil. 45, 13–26 (2016)
Harkness, S.: Women’s employment and household income inequality. In: Gornick, J., Jäntti, M. (eds.) Income inequality: Economic disparities and the middle class in affluent countries, pp. 207–233. Stanford University Press, Stanford (2013)
Hryshko, D., Juhn, C., McCue, K.: Trends in earnings inequality and earnings instability among U. S. couples: How important is assortative matching? Labor Econ. 48, 168–182 (2017)
Hyslop, D.R.: Rising US earnings inequality and family labor supply: The covariance structure of intrafamily earnings. Am. Econ. Rev. 91(4), 755–777 (2001)
Juhn, C., Murphy, K.M., Pierce, B.: Wage inequality and the rise in returns to skill. J. Polit. Econ. 101(3), 410–442 (1993)
Karoly, L.A., Burtless, G.: Demographic change, rising earnings inequality, and the distribution of personal well-being, 1959–1989. Demography 32(3), 379–405 (1995)
Jónsson, A.K.: A nation of bastards? Registered cohabitation, childbearing, and first-marriage formation in Iceland, 1994–2013. Eur. J. Popul. 37(1), 65–95 (2021)
Kollmeyer, C.: Family structure, female employment, and national income inequality: A cross-national study of 16 western countries. Eur. Sociol. Rev. 29(4), 816–827 (2013)
Larrimore, J.: Accounting for United States Household Income Inequality Trends: The Changing Importance of Household Structure and Male and Female Labor Earnings Inequality. Rev. Income Wealth 60(4), 683–701 (2014)
Lee, C.: Rising family income inequality in the United States, 1968–2000: impacts of changing labor supply, wages, and family structure. Int. Econ. J. 22(2), 253–272 (2008)
Lerman, R. I.: The impact of the changing US family structure on child poverty and income inequality. Economica 63(250), S119–S139 (1996)
Lerman, R. I., Yitzhaki, S.: Income inequality effects by income source: A new approach and applications to the United States. Rev Econ Stat 67(1), 151–156 (1985)
Martin, M.A.: Family structure and income inequality in families with children, 1976 to 2000. Demography 43(3), 421–445 (2006)
McGinnity, F., McManus, P.: Paying the price for reconciling work and family life: Comparing the wage penalty for women’s part-time work in Britain, Germany and the United States. J. Comp. Policy Anal. 9(2), 115–134 (2007)
Mookherjee, D., Shorrocks, A.: A decomposition analysis of the trend in UK income inequality. Econ. J. 92(368), 886–902 (1982)
Nieuwenhuis, R., Van der Kolk, H., Need, A.: Women’s earnings and household inequality in OECD countries, 1973–2013. Acta Sociol. 60(1), 3–20 (2017)
OECD: Chapter 6. Supporting single-parent families. In Evolving Family Models in Spain: A New National Framework for Improved Support and Protection for Families, OECD Publishing, Paris, https://doi.org/10.1787/c27e63ab-en (2022)
Pareliussen, J., Robling, P.-O.: Demographic Change and Income Inequality in the Nordic Countries. Nordic Economic Policy Review 2018:Â Increasing Income Inequality in the Nordics, Nordic Council of Ministers, Copenhagen. https://doi.org/10.6027/TN2018-519 (2018)
Pasqua, S.B.: Wives’ Work and Income Distribution in the European Countries. Eur. J. Comp. Econ. 5(2), 157–186 (2008)
Peichl, A., Pestel, N., Schneider, H.: Does size matter? The impact of changes in household structure on income distribution in Germany. Rev. Income Wealth 58(1), 118–141 (2012)
Pestel, N.: Marital sorting, inequality and the role of female labour supply: Evidence from East and West Germany. Economica 84(333), 104–127 (2017)
Schwartz, C.R.: Earnings inequality and the changing association between spouses’ earnings. Am. J. Sociol. 115(5), 1524–1557 (2010)
Schwartz, C.R.: Trends and variation in assortative mating: Causes and consequences. Ann. Rev. Sociol. 39, 451–470 (2013)
Sobotka, T., Toulemon, L.: Overview Chapter 4: Changing family and partnership behaviour: Common trends and persistent diversity across Europe. Demogr. Res. 19, 85–138 (2008)
Sologon, D., Van Kerm, P., Li, J., O’Donoghue, C.: Accounting for differences in income inequality across countries: tax-benefit policy, labour market structure, returns and demographics. J. Econ. Inequal. 19, 13–43 (2021)
Western, B., Bloome, D., Percheski, C.: Inequality among American families with children, 1975 to 2005. Am. Sociol. Rev. 73(6), 903 (2008)
Yonzan, N.: Assortative Mating and Labor Income Inequality: Evidence from Fifty Years of Coupling in the US. Stone Center Working Paper Series. no. 15, CUNY Graduate Center, New York (2020)
Acknowledgements
The authors thank the members of the Bocconi DISCONT Reading Group, participants at the World Inequality Conference 2021, and anonymous reviewers for helpful comments.
Author information
Authors and Affiliations
Corresponding author
Ethics declarations
Conflict of Interest
The authors have no conflict of interest.
Funding
This research was supported by funding from the European Research Council (ERC) Synergy Project DINA (Towards a System of Distributional National Accounts, Grant n. 856455) and from a Leverhulme Trust Grant for the Leverhulme Centre for Demographic Science.
Additional information
Publisher's note
Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.
Supplementary Information
Below is the link to the electronic supplementary material.
Rights and permissions
Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/.
About this article
Cite this article
Azzollini, L., Breen, R. & Nolan, B. Demographic behaviour and earnings inequality across OECD countries. J Econ Inequal (2023). https://doi.org/10.1007/s10888-022-09559-1
Received:
Accepted:
Published:
DOI: https://doi.org/10.1007/s10888-022-09559-1
Keywords
- Earnings inequality
- Economic homogamy
- Household structure
- Inequality decompositions
- OECD countries