Are those cohabiting more like married or more like single individuals? An analysis across Europe

Alicia Adsera, Princeton University

Given the increasing share of population that is choosing to cohabit (permanently or just extensively before marriage), it is relevant to ask whether those who are cohabiting behave more like married or more like single individuals. An extensive literature notes the larger instability of unions versus marriages. We use the 1994-2001 ECHP Survey to study gender differences in the income of cohabitants with respect to married individuals in 15 European countries. The expectation of a shorter commitment may deter specialization and reduce gender differences among unions as opposed to marriages. In general married men have been found to earn more than single men while the opposite is true for women. These differences may arise from selection (those with more potential earnings are more likely to marry) or from more specialization (within a marriage men specialize in labor market skills). However women with earnings potential may postpone marriage and cohabit first both to find a better match and to fully participate in the labor market before marrying. Preliminary results show among working men, those married earn 4% more than those in unions and around 32% more than single men. Married women earn around 7% more than single women but around 16% less than those in unions. The gap between married and cohabiting women shrinks when hours are included in some countries. Next I analyze differences in individual’s own income, household income and “adult equivalent” household income both in levels (OLS) and in changes (fixed-effects to account for unobservable characteristics) for marital status transitions for the whole population. For the whole population, married couples specialize more than cohabitants. Women’s own income decreases with marriage whereas the total adult equivalent household income increases. Labor division is weaker among European cohabitants than what Light (2004) finds for the US. The own income of cohabitants increases in the transition both for men and women.