Marriage and Wages: A Test of the Specialization Hypothesis

Abstract

We investigate the relationship between marriage and wages among men in Britain using panel data. Our econometric specifications allow for observed and unobserved heterogeneity and explicitly test the role of intra‐household specialization in explaining the observed relationship. Our estimates provide evidence for the existence of large selection effects into marriage based on observable and unobservable characteristics that are positively correlated with wages. After accounting for individual‐specific time‐invariant effects and a wide range of individual, household, job and employer related characteristics, we find a statistically significant premium that can be attributed to productivity differences largely resulting from intra‐household specialization.