Nieuwenhuis, Rense Need, Ariana van der Kolk, Henk
Year of Publication:
LIS Working Paper Series 598
In this paper we show that women's earnings attenuate inequality between coupled households, even though the earnings of spouses are positively correlated. We use data from the Luxembourg Income Study (LIS, 2013) on 572,222 coupled households, covering the period from 1981 to 2005 in 18 OECD countries. Three trends are described. Firstly, over time women's earnings increasingly contributed to total household earnings, thereby increasing equality within households. Secondly, the positive correlation between spouses' earnings increased over time. Thirdly, earnings inequality among women declined. With a counter-factual decomposition technique on earnings inequality, we show that the combined effect of these trends was that women's earnings increasingly attenuated earnings inequality between households. The trend towards women's earnings increasingly attenuating the inequality between households was mainly driven by decreasing inequality among women. If inequality among women had not declined as it did in recent decades, inequality between households would have been 25% higher than it actually was in 2005.