Labor Seminars Amsterdam

Speaker(s)
Natalia Zinovyeva (Aalto University, Finland)
Date
Tuesday, 15 May 2018
Location
Amsterdam

In a recent article Bertrand, Kamenica and Pan (2015) document that in the US, there is a sharp discontinuity to the right of 1/2 in the distribution of households according to the share of income earned by the wife. Bertrand et al. attribute this discontinuity to the existence of a gender identity norm postulating that a wife should earn less than her husband. We suggest that if there exists a force that pushes some spouses towards equalizing their earnings, it would create a similar discontinuity. A possible source of earnings equalization within couples may be related to the existence of family businesses. Using linked employer-employee data from Finland, we document the existence of the discontinuity in the distribution of spouses’ relative income and show that it can be fully attributed to post-marriage earnings’ convergence associated with the creation of family businesses. We also provide evidence suggesting that a similar tendency may exist in the US. Joint with Maryna Tverdostup.