Is There a Cohabitation Premium in Men's Earnings?

Abstract

This paper provides new evidence on wage premiums for men in relation to marriage and cohabitation. Using data from the U.S. National Longitudinal Survey of Youth 1979, the paper shows that even after accounting for selection there is a cohabitation wage premium, albeit smaller than the marriage premium, for white and black men but not for Hispanic men. The wage premiums appear to result from a steepening of the wage profile over the length of the relationship. We put forward a joint human capital hypothesis where intra-household spillover effects of partner's education can explain the existence of the wage premiums. Our findings provide some empirical support for the joint human capital hypothesis.

Keywords: Cohabitation, marriage, wage premium

JEL Classification: J0, J12, J31