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The Effects of Spousal Employment and Income for Married couples

By: Erick Hidalgo
Abstract
This study aims to find if there is a difference in income between households where only
the husband works, and households where only the wife works. In this model, income is the
dependent variable and spousal employment is the independent variable. My study will also
examine these effects with control variables such as age, education and children who live in
these households.

Introduction
Until recently the common theme in American households has been somewhat of a
cookie cutter layout for some time. This common American household consisted of a husband
who worked to provide for the family and a wife who would stay home to take care of
housework and children if they had any. The husband was usually the one who would have the
most educated background as well. This was a very common trend in America up until the last
few decades. In these recent times, women have become more independent and have started
entering the work force in larger numbers. Although it is not surprising to see households today
where the wife is the sole provider for the family, there is still controversy about biases towards
men in the workforce. This study aims to find if those biases are true. My hypothesis is that
households where only the husband works will have a higher income when controlled for
education and children presence in households.

Literature Review

I. Power Couples: Changes in The Locational Choice of the College Educated, 1940-1990
by Dora L. Costa and Matthew E. Kahn.
The data used in this paper is the 1940 and 1970-1990 censuses of population and
housing. Although this papers topic differs from my topic, there are some experiments conducted
that relate to my topic. Costa and Kahn define power couples as married couples where both
husband and wife have at least a college education. This paper’s aims to find an explanation for
why an increasing number of these power couples are living in large metropolitan areas. In the
introduction, they explain a couple of reasons that would be causing this disproportionate
increase of power couple’s in large cities. Their first reason is that educated people in general are
more likely to live in these areas because large universities tend to be near large cities. These
people may have met each other and married each other while already living in these areas. The
second reason is that these couples tend to have a high “colocation problem”. Large cities offer
each spouse a greater opportunity for each spouse to be closer to where they work. They argue
that up to 65% of the increase of power couples is due to this colocation problem.

There are five categories of “power” couple’s groups that are used in this papers
experiments:
• Power - both spouses have a college degree
• Part-power - only one spouse has a college degree
• Low-power – neither spouse has a college degree
• Single households who have a college degree
• Single households with no college degree
They use various control variables in experiments with these five “power” groups. These
variables consist of fertility, location choice, benefits of residence location, labor force
participation, returns to living in a metropolitan area and graduate school ranking.
Through the various experiments done in this paper, Costa and Kahn found that the
increase of power couple residence was greater in larger metropolitan areas rather than in smaller
metropolitan areas. They found that the quality of PhD programs was positively related to city
size in 1970 and in 1993 and that the correlation between city size and program ranking has
become larger in that time span. In relation to my topic, this paper found that wives’ participation
rate was lowest in larger metropolitan areas and declined consistently from 1940 to 1990. They
explain that this can be interpreted as wives’ leaving the workforce due to their educated
husband’s experiencing greater returns from city size.

II. Married Women’s Employment Status and Family Income by Mary Ann O’Loughlin and
Bettina Cass
This paper attempts to explain how Income inequality between married couples becomes
larger as wives’ take on more prosperous jobs. Although this paper does not have the same goal
as mine, it does account for some topics that are of interest in my research. They found that:
• wives’ highest workforce participation rate occurs when husbands’ earnings are less than
$10,000
• Wives’ workforce participation rises the fewer children the couple have
• When husbands had no income, wife’s workforce participation rate was only 15.2%
The workforce participation of 15.2% seem to have been due to this particular group of people
relying on social security from either the husband or both spouses.

III. Changes in Wives' Income: Effects on Marital Happiness, Psychological Well-Being, and
the Risk of Divorce (2001) by Stacy J. Rogers and Danelle D. Deboer
The authors purpose of this paper is to see if an increase in wives’ income has any effect
on divorce rates and happiness. This paper uses a sample of 1,047 married individuals from a
five-wave panel survey lasting from 1980 to 1997. This data was gathered by the department of
sociology at Pennsylvania state university They use the “well-being and happiness” information
they extrapolated from that data and used it to assess the happiness and well-being of married
couples in 1988.

The authors run multiple experiments in this paper relating to income, happiness and
marital discord. One model that relates to my topic is table 2 in this paper. This table their
prediction of marital happiness by having comparisons of wives’ income and marital discord
from 1980 to 1988 as the independent variables and wives’ and husbands’ absolute and relative
income as the dependent variables. They found through this experiment that married wives’
perception of discord were associated with later increases in their income. They found husbands’
perception of discord to have no such affect. They tested the stability of this model by adding the
respondent’s duration of marriage, race, education, age and number of children in the household
in 1980 and 1988. They found that the addition of these controls did not alter the resulting
conclusions. The results were similar to another figure that is displayed earlier in their paper.

Data Description
For this paper, I have used the American Community Survey data from 2015. My dataset
consists of both household’s record and personal records from the 2015 ACS data. I have chosen
to set my minimum age at 18 because this is the age where respondents would be receiving the
lowest obtained degree I have included in my experiments (high school diploma). I also set the
max age for my age at 65 because I did not want to include anyone in my experiments who was
receiving social security benefits. I made dummy variables for fes, schl and huparc to better
describe specific cases in my study.

Variable Name Variable Description

hincp Household income in last 12 months
fes1 Married couple family- both husband and wife in the labor force
fes2 Married couple family- husband in labor force, wife is not
fes3 Married couple family- wife in labor force, husband is not
schl16 Highest educational attainment- high school diploma
schl21 Highest educational attainment- bachelor's degree
schl24 Highest educational attainment- doctorate's degree
huparc1 Presence of related children under age 6 only in household
huparc2 Presence of related children between age 6 and 17 only in household
huparc3 Presence of related children under age 6 and between ages 6 and 17 in household
huparc4 No related children in household
agep respondent's age

Empirical Results
Base equation for experiment: hincp=B0 + B1(fes) + B2(schl) + (huparc) + Ei
Summary Statistics

Variable Obs Mean Std. Dev. Min Max

hincp2 1,124,332 10.46751 10.24666 -1.57 218.62
fes1 930,669 0.420559 0.493649 0 1
fes2 930,669 0.205258 0.40389 0 1
fes3 930,669 0.057833 0.233427 0 1
schl16 1,183,523 0.181901 0.385763 0 1
schl21 1,183,523 0.19672 0.397519 0 1
schl24 1,183,523 0.013478 0.115312 0 1
huparc1 1,124,332 0.093142 0.290631 0 1
huparc2 1,124,332 0.246674 0.431075 0 1
huparc3 1,124,332 0.098937 0.298578 0 1
huparc4 1,124,332 0.561248 0.496235 0 1
agep 1,183,523 41.45721 13.85372 18 65

For my experiments, I used income as the dependent variable and fes1 and fes2 as the
two main independent variables. I will be controlling for the various schl and huparc variables
listed in my variable description table. I have divided this portion of my paper into three sections.
Each section’s regression tables follow the same outline, but will each include a different beta1.
The first table in each section controls for households with no children and the proceeding table
controls for households with children. The section outline for each table is as follows:
• Regression (1): no control variable
• Regression (2): households where neither spouse has and educational degree
• Regression (3): households where at least one spouse has a high school diploma
• Regression (4): households where at least one spouse has a bachelor’s degree
• Regression (5): households where at least one spouse has a doctorate degree

Section I
Table 1 and table 2 display the results of households where both spouses are in the work force.
Table 1 hincp=B0 + B1(fes1) + B2(schl) + (huparc=4) + Ei
(1) (2) (3) (4) (5)
hincp2 hincp2 hincp2 hincp2 hincp2

fes1 5.050*** 2.879*** 4.911*** 4.778*** 4.972***
(0.0322) (0.0657) (0.0320) (0.0321) (0.0320)

schl16 -2.652***
(0.0321)

schl21 3.668***
(0.0423)

schl24 8.039***
(0.203)

_cons 9.395*** 6.086*** 9.948*** 8.751*** 9.323***
(0.0181) (0.0287) (0.0203) (0.0183) (0.0180)

N 438806 57785 438806 438806 438806
R-sq 0.057 0.040 0.067 0.077 0.065

Standard errors in parentheses
="* p<0.05 ** p<0.01 *** p<0.001"



Table 2 hincp=B0 + B1(fes1) + B2(schl) + (huparc<4) + Ei
(1) (2) (3) (4) (5)
hincp2 hincp2 hincp2 hincp2 hincp2

fes1 5.064*** 2.419*** 4.915*** 4.656*** 4.947***
(0.0301) (0.0392) (0.0298) (0.0300) (0.0299)

schl16 -3.054***
(0.0277)

schl21 5.181***
(0.0453)

schl24 10.45***
(0.194)

_cons 8.360*** 5.232*** 9.008*** 7.639*** 8.270***

(0.0172) (0.0188) (0.0194) (0.0167) (0.0171)

N 491863 102490 491863 491863 491863
R-sq 0.058 0.042 0.071 0.092 0.071

Standard errors in parentheses
="* p<0.05 ** p<0.01 *** p<0.001"

Section II
Table 3 and table 4 display the results of married couples’ households where the husband is in

Table 3 hincp=B0 + B1(fes2) + B2(schl) + (huparc=4) + Ei

(1) (2) (3) (4) (5)
hincp2 hincp2 hincp2 hincp2 hincp2

fes2 0.802*** 0.153* 0.808*** 0.839*** 0.783***
(0.0468) (0.0710) (0.0466) (0.0462) (0.0467)

schl16 -3.063***
(0.0329)

schl21 4.198***
(0.0428)

schl24 8.933***
(0.205)

_cons 11.32*** 6.857*** 11.89*** 10.45*** 11.21***
(0.0167) (0.0297) (0.0189) (0.0177) (0.0166)

N 438806 57785 438806 438806 438806
R-sq 0.001 0.000 0.014 0.027 0.010

Standard errors in parentheses
="* p<0.05 ** p<0.01 *** p<0.001"
the workforce and the wife is not

Table 4 hincp=B0 + B1(fes2) + B2(schl) + (huparc<4) + Ei

(1) (2) (3) (4) (5)
hincp2 hincp2 hincp2 hincp2 hincp2

fes3 -1.113*** -0.380*** -1.134*** -1.109*** -1.103***
(0.0500) (0.0950) (0.0498) (0.0496) (0.0499)

schl16 -3.065***
(0.0329)

schl21 4.191***
(0.0428)

schl24 8.943***
(0.205)

_cons 11.54*** 6.915*** 12.12*** 10.68*** 11.42***
(0.0165) (0.0282) (0.0189) (0.0173) (0.0164)

N 438806 57785 438806 438806 438806
R-sq 0.001 0.000 0.014 0.027 0.010

Standard errors in parentheses
="* p<0.05 ** p<0.01 *** p<0.001"

Section III
Tables 5 and 6 display the results of married couples’ households where the wife is in the
workforce and the husband is not.
Table 5 hincp=B0 + B1(fes3) + B2(schl) + (huparc=4) + Ei
(1) (2) (3) (4) (5)
hincp2 hincp2 hincp2 hincp2 hincp2

fes2 -0.546*** -0.652*** -0.560*** -0.607*** -0.536***
(0.0358) (0.0370) (0.0355) (0.0349) (0.0356)

schl16 -3.436***
(0.0284)

schl21 5.817***
(0.0452)

schl24 11.46***
(0.197)

_cons 10.68*** 6.174*** 11.34*** 9.688*** 10.53***
(0.0169) (0.0206) (0.0191) (0.0173) (0.0167)

N 491863 102490 491863 491863 491863
R-sq 0.000 0.003 0.017 0.045 0.016

Standard errors in parentheses
="* p<0.05 ** p<0.01 *** p<0.001"

Table 6 hincp=B0 + B1(fes3) + B2(schl) + (huparc<4) + Ei

(1) (2) (3) (4) (5)
hincp2 hincp2 hincp2 hincp2 hincp2

fes3 -1.210*** 0.238* -1.191*** -1.171*** -1.177***
(0.0650) (0.0936) (0.0650) (0.0641) (0.0649)

schl16 -3.431***
(0.0284)

schl21 5.807***
(0.0452)

schl24 11.46***
(0.197)

_cons 10.60*** 5.978*** 11.25*** 9.588*** 10.44***
(0.0153) (0.0175) (0.0179) (0.0156) (0.0151)

N 491863 102490 491863 491863 491863
R-sq 0.000 0.000 0.017 0.045 0.016

Standard errors in parentheses
="* p<0.05 ** p<0.01 *** p<0.001"

In all the regression I ran, households where husbands were the exclusive worker were
more likely to be the households with higher income. Column one shows that without any
control variables, households where husbands are exclusively in the workforce are more likely to
yield higher income. Column two shows the relationship controlling for children in the
respondent’s household that are under the age of 18. Although both household types dropped,
households where the wife is the exclusive worker dropped even further. Column 3 shows the
relationship without any children living in the households. In this regression, the husband worker
household dropped to its lowest point yet, while the wife worker households returned closer to
it’s coefficient from the first regression.

V. Conclusion:
According to my results, Households with only one spouse in the workforce are more likely to
have a higher income if the husband is in the workforce and there is at least one related child
under the age of 18 is residing in the household. As of now all the results are significant. I am
planning to also add age and education for control variables.

References
1) Costa, D., & Kahn, M. (2000). Power Couples: Changes in the Locational Choice of the
College Educated, 1940-1990. The Quarterly Journal of Economics, 115(4), 1287-1315.
Retrieved from http://www.jstor.org.libaccess.sjlibrary.org/stable/2586925
2) Kahneman, D., & Deaton, A. (2010). High income improves evaluation of life but not
emotional well-being. Proceedings of the national academy of sciences, 107(38), 16489-
16493.

3) Lillard, L., & Constantijn W. A. Panis. (1998). Panel Attrition from the Panel Study of
Income Dynamics: Household Income, Marital Status, and Mortality. The Journal of
Human Resources, 33(2), 437-457. doi:10.2307/146436
4) Grinstein-Weiss, M., Charles, P., Guo, S., Manturuk, K., & Key, C. (2011). The Effect of
Marital Status on Home Ownership among Low-Income Households. Social Service
Review, 85(3), 475-503. doi:10.1086/662166