Why Do American Women Work More Than Europeans?

Economists Indraneel Chakraborty and Hans Holter have an explanation for all those extra hours Americans work as compared to Europeans: divorce rates (and tax rates)  Here’s their theory:

We believe this is because marriage provides an implicit social insurance since the spouses are able to share their income. However, if divorce rates are higher in a society, women have a higher incentive to obtain work experience in case they find themselves alone in the future. The reason the incentive is higher is because in our data, women happen to be the second earner in the household more often than men. European women anticipate not getting divorced as often and hence find less reason to insure themselves by working as much as American women.

Chakraborty and Holter use U.S data to run a model testing their theory; their findings are interesting:

We find that stable marriages lead to a reduction in labour supply. Both in the data and in the model the effect is on the extensive margin, i.e. whether women will choose to work or not. In our counterfactual economy, if just marriage stability in US were the same as in the European countries, it explains 24% of the cross-country variation in hours worked for females. When we also introduce European taxes, we are able to explain 43% of the variation in female work hours across the continents.

 The authors also point out that Americans started working more in the 1970′s, right around the time the US started passing “no-fault” divorce laws and well before Europe started adopting such laws.

 

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  1. random name says:

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    • Mike B says:

      One income is more than enough to ensure that a family has food and clothing, just like it used to be back in the day. However as a Western lifestyle has accumulated more costs it is easier if both economic actors in a typical family unit are gainfully employed. I would say it is a triumph of gender role equality that both partners are expected/encouraged to get out and perform some useful task. As the west faces ever more competition from the east it will be critical to maximize labour force participation.

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      • random name says:

        sure if 1 person makes more than twice the average salary than once income is perfect; you surely can’t be saying that all single incomes are adequate to support a family when low wage jobs can’t even support an individual

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      • Joe J says:

        Very true. There have been many studies on how little the second income actually changes the household net income, when one fairly looks at the added costs that the second job adds to the household. These costs include, daycare, second vehicle, increased taxes and taxrate, increase in food costs (eating out esp lunches) and a secondary buisness wardrobe.
        Considering the extra costs the 2 income couples do nt gain as much from the second income as most estimate.

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      • Jim says:

        Well that really depends on the situation doesn’t it?

        In our case:
        We have no children so no daycare
        We work close together so Carpooling FTW (Which is the greatest thing ever hear in SoCal!)
        Our Tax burden has remained constant

        Now I know this isn’t absolutely the norm but we could easily survive solo but we have much more disposable/savings income this way.

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      • Mike B says:

        Those studies looking at the gain from a second income and finding it to be small do make a lot of assumptions about what costs can be shed without a second job (second vehicles are often necessary even with one parent staying at home) or about the stage of life of the children (young children need more care than older children). What matters is one parent that is locked into being stay at home, or both parents staying career ready. Unless a family generate a parade of offspring, has to care for a disabled family member or is managing a 19th century plantation, a full time stay at home parent is ether going to be over involved in their children’s lives or will be consuming far too much leisure.

        Ultimately parents that aren’t carer ready are unable to deal with unforeseen circumstances like financial difficulty, illness or the sudden incapacitation of the breadwinner. That’s why people get mad at those that only aspire to be stay at home parents. If push comes to shove its not a career one can get paid for.

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    • James says:

      That entirely depends on what you mean by “make it”. Certainly if you want to live in a McMansion, drive a couple of new SUVs, have the latest smartphones with unlimited data plans, dine in expensive restaurants, freqently jet off to other countries for vacations, and so on, you can easily spend two incomes, or more. (With a large chunk going to interest payments…) But a couple can also live a comfortable & pleasant life on less than one median income, if they find their pleasures in less expensive things.

      I can’t help but wonder whether the correlation with no-fault divorce laws isn’t just accident. After all, the 1970s were also the time when “women’s lib” ideas really started taking hold, and large numbers of women discovered that they really could have interesting careers outside the home.

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      • James says:

        “…the correlation with no-fault divorce laws isn’t just accident.”

        Or rather, as I should have said (if only there was an edit function) that both working women and no-fault divorce are consequences of women attaining a more nearly equal status in society.

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      • Carla FW says:

        What are the divorce laws like in Europe? My understanding is that they are at least as liberal as ours, which makes the entire analysis fall apart. The issue ISN’T whether there is no fault divorce here which thus makes divorce easier. The issue is what financial stresses are present in the United States between married people which are not as pronounced between married Europeans. Europeans are paid higher wages, required to work fewer hours, have access to universal health care, have much better mass transportation systems, possess much better child care options, and enjoy far less expensive access to education. To claim that this is all about people wanting McMansions and big, fancy cars is ludicrous. There are those, of course, but the fact is that Americans work far more hours for far fewer wages. This is the reality of our proud proclamation that “Americans are the most productive workers in the world.” Of COURSE they are. Many of them are doing the work of two or three people. Where most Europeans are entitled to holiday leave and sick leave many Americans do not have them at all, or such benefits as they DO have are parsimonious at best. Approximately 97% of the increase in wealth in this country over the past couple of decades has accrued to the top 1%, and actual wages versus cost of living for most Americans are going DOWN. People work two or three jobs just to get by. Many people take few vacations. We carry far more debt than Europeans and the number one cause of excess consumer debt is related to our medical expenses. We are now facing a catastrophic student debt crisis thanks to our refusal to see the sense of subsidizing public education right through college and grad school so as to have a good pool of highly educated and skilled workers. All of this contributes to the higher divorce rate.

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  2. ahoy says:

    In a nutshell, instability leads to production out of fear.

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  3. Ally says:

    The authors of this study seem to assume that women who don’t “work” are sitting around doing nothing. Most women who don’t “work” are actually performing a plethora of unpaid but critical functions. They are, among other things, child-rearers, educators, carers, counsellors, cooks, cleaners, event organizers and volunteers. When women go into paid employment, other people get paid to do the work they would have done for nothing. So perhaps stable marriages reduce both labor supply and demand in terms of the visible economy, but I would be greatly surprised if less work actually gets done.

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  4. Carla FW says:

    Nonsense. The stress of trying to get by in the United States actually contributes very much to our higher tendency to divorce. That’s because we lack the European social safety net and must pay far higher out of pocket costs for things like health care and child care and education, all of which are much more heavily subsidized by the European states. It is this additional financial stress which contributes to the high divorce rates and also creates a self-perpetuating cycle of financial instability which continues to make preserving a marriage more difficult.

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  5. Word says:

    Cite Prescott 2004 plz.

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  6. Jake W. says:

    Or, maybe the fact that women started working and earning more opened the door for divorce. You know, some sort of I-am-making-$50,000-I-don’t-need-you mentality.

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  7. random name says:

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  8. Dana says:

    Interesting theory but I don’t think it really holds water. Europeans work less because of the structure of the labor laws in European socialist countries which provide very strong job security to employees. You basically cannot be fired, there are limits to how much overtime you can work and overtime wages are taxed at the highest tax rate, no matter what your overall income so you get very little by way of compensation for overtime work. I would say that these factors rather than “happier marriages” account for this.

    People don’t work as long of hours simply because they don’t have to.

    Also, the divorce rate is lower in Europe, not because more marriages are happy but because there are less marriages. In most European socialist countries it is possible to attain all the rights and status of marriage without marriage and many couples (at least in Holland) live with their partners without marriage. No marriage means no divorce and a lower divorce rate.

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