How marriage contributes to household inequality
TheGlobeandMail.com – Globe Debate
Feb. 28 2014. Marina Adshade
A report released this week by the Institute of Marriage and Family sounds the alarm on increasing marriage inequality in Canada. The report finds that 86 per cent of high-income households consist of a couple that is either married or cohabitating, yet only 49 per cent of middle-income households and 12 per cent of low-income households have that arrangement.
Those numbers do seem starling and, in fact, the report states, “The marriage gap between rich and poor remains very large, worthy of serious consideration by policy makers. “
Some suggestions for dealing with the marriage gap include government programs to promote marriage including married family tax breaks, government sponsored advertising campaigns, accessibility to marriage counseling and improved labour practices that would make it easier for Canadians to find a balance between home and work life.
There is nothing inherently wrong with these suggestions; many other countries have implemented similar programs in the hope of bolstering their sagging marriage rates.
There is, however, one problem. If it is the marriage gap that really concerns us, then marriage promotion policies are the wrong way to go; these policies will only increase the marriage rate in the top if the income distribution will leave the marriage rate in the bottom of the distribution unchanged.
That is, marriage promotion policies will only increase the marriage gap that report finds is cause for concern.
To see why, imagine we have a single person whose household income places her in the bottom of the income distribution; say that she earns $25,000 per year. The government implements a tax break for married couples and she decides that the policy makes it worthwhile to marry her boyfriend. If he also earns $25,000, their household income is now $50,000 and they have moved from being two low-income households to being one middle-income household.
This is is good news for this couple, but given the way that household income groups are measured (in quartiles) when these two people move up the distribution from the bottom to the middle then two other people must move down the distribution, those who were earning the minimum needed to be in the middle-income group.
In the very likely event that those two households are both unmarried, the share of married households in bottom of the income distribution is unchanged from when we started and, importantly, the share of married households in the middle of the income distribution has increased simply because the joint income of this couple places them in that income group.
So, the marriage gap has widened.
You might think that is simply an accounting issue, and that no family was made worse off by this change, and that is exactly the point that I want to make.
There are many circumstances in which the observation that the marriage gap has widened is actually good news for Canadian families. It can be an indication that the welfare of some people, specifically married couples, has improved over time.
Take for example, the widening of the marriage gap between households in the middle of the income distribution and those in the top of the distribution from 27 percentage points in 1976 to 37 percentage points in 2011.
The most likely explanation for the widening of this gap is not that middle class Canadians are not marrying, but rather that when they do marry they move up the income distribution and, like the couple in the above example, they displace unmarried individuals in the top of the income distribution.
In 1976, only 47 per cent of married households had a wife that was working compared to the 69% of married households today; more married couples are living on two incomes than there were in the past.
In 1976, only 12 per cent of wives earned more than their husbands compared with 31% that earn more today; increased relative earnings of women has increased the household income of dual-earning married couples.
Back in 1970, 57 per cent of university-educated men were married to women with less education than themselves compared to only 29.5 per cent today; households in which wives are better educated than their husband earn higher incomes than households in which wives are less educated.
What the marriage gap data tells us, in reality, is that married couples are doing much better economically than everyone else. Are we absolutely certain that these are the households that need a tax break?
The families living in the bottom of the income distribution in Canada have seen no improvement in their standard of living over the past 35 years; the top earners in at income bracket have seen their real income increase by only $600 over that period. If we really care about the welfare of families in this group what we really need is policies that allow unmarried households, particularly those with children, to have a standard of living that at least approaches those of married households.
Now that would be something.
Marina Adshade is the author of The Love Market: What You Need To Know About How We Date, Mate and Marry. She teaches at the University of British Columbia’s Vancouver School of Economics.
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