Does Marriage Lead to Specialization? An Evaluation of Swedish Trends in Adult Earnings Before and After Marriage

Abstract

We examine whether marriage leads to specialization in Sweden by implementing a model that differentiates specialization in the household by cohabitation and marriage. Our paper evaluates this model using panel data to analyze trends in earnings before and after marriage between 1985 and 1995 for married and long-term cohabiting Swedish couples with children. To identify the effect of marriage on earnings we use the reform of the widow’s pension system that resulted in a marriage boom in Sweden in 1989 and difference-in-difference estimation. Our results show that most of the male marriage premium can be explained by positive selection whereas the female marriage penalty reflects increased specialization in home production and childcare. The findings suggest that the positive selection of men into marriage translates into the increased specialization of women. We also find evidence that marriage facilitates specialization in the few couples where mothers earn more than fathers, resulting in a marriage premium for women and a marriage penalty for men. Finally, we find that the net effect of marriage on family earnings is zero because the male marriage premium is offset by the female marriage penalty. Our results show that specialization results from the legal arrangement of marriage, not from the living arrangement of the household.