## Healthcare Economist

Unbiased Analysis of Today's Healthcare Issues

## Are all the good men married?

Written By: Jason Shafrin - Dec• 09•08

Does marriage cause men’s wages to rise?  This is the question addressed by UCSD professor Kate Antonovics and Robert Town in their 2004 paper in AER cleverly titled “Are all the good men married?

It has been shown that married men earn more money than non-married men with similar characteristics.  Why is this?  A few explanations are:

1. Married men are more productive since they specialize in non-household production,
2. Employers could discriminate in favor of married men, or
3. the unobservable characteristics that make men more productive in the labor market also make them more attractive in the marriage market.
A simple way to figure out the marriage wage premium is to run an OLS regression.
• wij = βMij + γXij + μij + fj + uij   (1).
• M: married, X: other variables, μ: individual fixed effect, f: family fixed effect, u: error term
• For OLS, the residual is equal to μij + fj + uij   (1).

Using OLS, the authors find that married men earn a 19% wage premium over non married men.  However, this specification does not solve the selection problem.  If it is true that unobservable factors affect wages and marriage eligibility, then the marriage dummy variable will be correlated with the residual and β may be biased upwards.

How do the authors solve the endogeneity problem?  They use data from the Socioeconomic Survey of Twins.  For a pair of monozygotic twins, we can rewrite equation (1) as follows:

• w1j= βM1j + γX1j + μ1j + fj + u1j  (2)
• w2j = βM2j + γX2j + μ2j + fj + u2j  (3)

Since twins are in the same family, we know that fj in both equation is the same.  Further, we assume that the genetically determined, individual specific earnings endowment is the same across twins (i.e., μ1j = μ2j). Thus we can difference out the two equations so that we are left with:

• w1j – w2j = β(M1j – M2j) + γ (X1j – X2j) + (u1j – u2j)  (4)
Using this specification on the twin data, the authors find that marriage confers a 26% wage increase.  Because of the similarity between the OLS and twin data, the authors claim that “men are not selecting into marriage based on unobserved heterogeneity in earnings capacity.”

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#### No Comments

1. AnnR says:

I wasn’t left exactly sure what the conclusion was.

Perhaps employers discriminate in favor of married men because they have observable traits like showing up regularly and attending to their tasks so as to bring home the bacon for their families?