Minding the gap : a cross-country analysis of wage differentials using the Luxembourg Income Study Database

This research estimated the marriage penalty/premium and parenthood penalty/premium to wages in four countries, the United States, Canada, the United Kingdom, and Norway, using the Luxembourg Income Study Database. Individuals were separated into subgroups to isolate the effect of marriage and parenthood on wages. A two-stage regression procedure was used which employed Heckman's correction for self-selection bias. In addition, a decomposition procedure was used to highlight the characteristic, parameter, and self-selection effects.

This investigation found that the marriage penalty to women's wages varies substantially across countries. The largest marriage penalties to women's wages were found in the United Kingdom and Norway, with a significantly smaller marriage penalty in the United States, and a small marriage premium to women's wages in Canada. These penalties/premium are unexplained by personal characteristics of the women in question. Men in all four nations experienced a substantial marriage premium.

This analysis points out one particular difference in institutions across the nations in the study: the legislative framework supporting equal pay for women in the workplace. It is evident within the limited confines of this study that the pattern of equal pay legislation follows the pattern of marriage penalties uncovered in this study.

This investigation found significant parenthood penalties to women's wages in all four countries. Women in the United States incurred the largest parenthood penalty to their wages. Men typically incurred either a small parenthood penalty or none at all.