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Using data from the Current Population Survey March Supplement 1999, this study examines why married men earn more than men who have never married. We find that the marriage wage premium cannot be attributed to the unobservable higher earnings capability of married men. Instead, wage gains from marriage are explained by the degree of specialization within the household. Our findings cast doubt on the argument that the selection of high-ability men into marriage is the cause of the marriage wage premium. (JEL J12, J31)
ABBREVIATIONS
CPS: Current Population Survey
IV. Instrumental Variable
MSA: Metropolitan Statistical Area
NLS: National Longitudinal Survey
NLSY: National Longitudinal Survey of Youth
OLS: Ordinary Least Squares
I. INTRODUCTION
Labor economists have devoted considerable effort to explaining why married men earn higher wages than men who have never married. A number of theoretical hypotheses have been advanced to explore the nature of this marriage wage premium. The dominant theory is the productivity hypothesis, which argues that marriage makes men more productive (Becker, 1991). Married men have greater opportunities to specialize in labor market activities when their wives specialize in home production. The marriage wage premium reflects a productivity gap between married and never-married men, stemming from different conditions for human capital accumulation in market work.
A competing argument is the selection hypothesis (Nakosteen and Zimmer, 1987, 1997). This reverses the direction of causality, proposing that men with a higher earnings capability are valued more in the marriage market and are thus more likely to marry. The marriage premium mirrors the marriage selection pattern. Married men are more productive not because they become more productive after marriage, but because they were more productive before marriage.1
While there is compelling evidence that married men have higher earnings than never-married men (Hill, 1979), the relative merits of the productivity and selection arguments in explaining the existence of the marriage premium remain to be established. Nakosteen and Zimmer (1987) argue that the marriage premium is a statistical artifact arising from a sorting process in which high-wage males tend to be selected into marriage. When selection effects are accounted for in their wage regression, the marriage premium remains numerically large but becomes statistically insignificant. However, Korenman and Neumark (1991) show that the selection hypothesis is...