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Marriage and Men’s Earnings: Specialization and Cross-Productivity Effects

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Abstract

We use the National Longitudinal Survey of Youth, 1979 to study the relationships between married men’s earnings and marriage and spouse characteristics. We test three theories posited in the literature to explain these relationships — selection, specialization, and cross-productivity. While previous research finds evidence in support of all three explanations, we argue that the empirical models used are underspecified resulting in biased tests of the theories. We estimate a more complete model, encompassing all three theories. We find evidence in support for the selection and specialization hypotheses, but little support for the cross-productivity hypothesis.

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Notes

  1. A recent paper by Rodgers and Stratton [2010] examines black and white differences in the marriage premium. They claim that they are the first to do so.

  2. This is essentially the interpretation Jepsen [2005] gives to her finding that the size of the cross-productivity effect of wife’s education on husband’s earnings fell during the 1960–2000 period when labor force participation of married women was increasing.

  3. We thank an anonymous referee for this suggestion.

  4. An exception is the paper by Neuman and Ziderman [1992]. However, they include the interaction for an econometric reason — to avoid biasing the spouse education effect because of “the high correlation between spouses’ education” — instead of its importance for the specialization hypothesis.

  5. Exceptions to this include Rodgers and Stratton [2010], Song [2007], and Blackburn and Korenman [1994].

  6. Blackburn and Korenman use the current population survey. Rodgers and Stratton [2010], on the other hand, find slightly larger marriage premia for black men using the NLSY79.

  7. In regressions not reported in the paper, we estimate models on a pooled sample of black and white men and include interaction terms between a black dummy and each marriage characteristic. In the “specialization” models an F-test on these interactions fails to reject the hypothesis that the coefficients are jointly zero. However, the point estimate on the black × children interaction term is negative and almost exactly offsets the positive coefficient on the linear children term. In fact, we fail to reject the hypothesis that the coefficients on children and the black × children interaction sum to zero.

  8. We limit the analysis to these waves because of the importance of occupation controls for the econometric analysis. The NLSY79 uses a consistent set of industry and occupation codes for survey years 1979–2000 (1970 Census codes). After 2000, industry and occupation are recorded using the 2000 Census codes, which are not directly comparable to the 1970 codes. We estimated all models on 1979–2006 panels, omitting industry and occupation controls. The conclusions from these regressions are essentially the same as those using the shorter sample and the industry and occupation controls.

  9. For some observations this information would be before the current marriage, therefore we estimated all models restricting the sample to marriages of at least 1 year in duration. The estimation results using this restriction are essentially the same as reported in the paper using all current marriages.

  10. The $400 upper bound on hourly wages eliminates 14 person-year observations. We estimated all models with several alternative upper bounds on hourly wages: $100 (eliminates 41 person-year observations), $200 (eliminates 21 person-year observations), and no upper-bound. Results were essentially the same in all cases and conclusions were unaffected by choice of restriction used.

  11. For example, Cornwell and Rupert [1997] suggest that children cause “a shift in the wage-generating process involving adjustments in market work and homework.”

  12. A Hausman test of RE vs FE rejects RE (P-value=0.000). This test is implemented using the Stata user-written command “xtoverid” [Schaffer and Stillman 2010]. This command implements the artificial regression approach as described by Wooldridge [2002].

  13. The P-values for the F-tests are 0.3400 and 0.3462 for the full and restricted samples, respectively. When using RE, on the other hand, the F-tests reject the hypothesis of equal coefficients across race (P-values 0.0103 and 0.0409 for the full and restricted samples). The only statistically significant individual coefficient (P<0.10) is that on the interaction term black × wife’s mean labor market hours × children. This coefficient is positive and almost exactly offsets the negative coefficient on the wife’s mean labor market hours × children interaction term, suggesting less specialization in black marriages, as others have suggested.

  14. The F-test on the significance of the wife’s current hours rejects the null hypothesis (P-value=0.0008). The point estimates imply that when there is one child in the household, in any year the wife works an extra 1,000 hours (compared with average annual hours during the marriage) the husband’s wage is about 2 percent lower.

  15. We also estimated the models reported in Table 4 without the husband’s education-marriage duration interaction term with the same estimation methods. In each case the wife’s education-marriage duration term was positive and statistically significant, implying a cross-productivity effect. Since the research typically omits the husband’s education-marriage duration interaction term, our results suggest that the finding is spurious because of omitted variable bias.

  16. We use different groupings of occupations. Table 5 columns are titled by the groupings. “Managers”: all occupations in the 1970 Census code between 200 and 246. Since this includes occupations that are not really managerial positions [Hotchkiss and Moore 1999], “Managers1” is a subset of Managers: codes 202 (bank officers and financial managers), 220 (office managers), and all occupations between 230 and 246, inclusive (a miscellaneous list of managerial occupations). Professional/Managerial: codes 001–196 and 200–246; Non-Professional/Managerial: all occupations outside of codes 001–196 and 200–246.

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Dalmia, S., Smith Kelly, C. & Sicilian, P. Marriage and Men’s Earnings: Specialization and Cross-Productivity Effects. Eastern Econ J 42, 335–348 (2016). https://doi.org/10.1057/eej.2014.63

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