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.
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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.
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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.
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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
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DOI: https://doi.org/10.1007/s10888-022-09559-1
Keywords
- Earnings inequality
- Economic homogamy
- Household structure
- Inequality decompositions
- OECD countries