Wives’ Work And Income Distribution In European Countries

Women’s participation in the labour market varies substantially across Europe. In Northern countries female participation is usually higher, while, as we move towards the South of Europe, more traditional household models are still predominant and women are more devoted to domestic than to labour-market activities. At the same time we find that income is distributed more equally in North Europe (except the UK and Ireland) than in Southern Europe. The paper analyses the impact of wives’ work on income distribution in a cross-national perspective using ECHP (European Community Household Panel) data for 1995. The decomposition of inequality by type of household shows that almost everywhere income is distributed more equally among dual-earner than among male-breadwinner households. As the percentage of dual-earner families is higher in Northern Europe countries, this contributes to equality. Sub-group analysis shows also that within-group inequality is the main source of inequality in all countries, while between-groups inequality has a lower impact. Decomposition by sources of income reveals that in European countries women’s earnings explain a lower proportion of total inequality than men’s earnings and the impact of women’s work on income distribution is mainly due to the “employment effect”: where women work less, inequality in women’s earnings distribution is higher because of the presence of many zeros in the distribution. Moreover, the analysis of the inequality among working wives shows that female labour income is distributed more equally where women’s employment rates are higher and vice versa. Finally, using counterfactual distributions, it is possible to show how an increase in women’s participation in the labour market can decrease inequality in household income distribution