The distributional effects of marital status and children: Evidence from large administrative panel data

In this paper, I study the effects of marital status and children on income distribution using large tax panel data. I control for unobserved heterogeneity by including individual fixed effects in quantile regression models. My main findings are threefold. First, there is considerable heterogeneity in the income effects for women but not for men. High-income women are less negatively affected by marriage and divorce. Second, marriage and divorce significantly affect not only labour income but also income with transfers and total income. The heterogeneity of the effects for women is robust to the choice of the income aggregate. Finally, a review of only couples indicates that being married and being divorced, as well as having children, increase the income gap between men and women at all parts of the distribution.