Living Arrangements, Labor Force Participation and Income

A recent article in The Regional Economist shows that measures such as labor force participation (LFP) and income inequality are closely connected with the living arrangements people choose.

Senior Economist Guillaume Vandenbroucke examined how economic life differs for people in various living arrangements, focusing on LFP and earnings.

Labor Force Participation

Vandenbroucke compared the LFP rates of married men with married women¹ and also the rates of never-married men with never-married women, all within the ages of 18 to 50. He found that the LFP rate of married men has been above 90 percent over the past 35 years, but the LFP rate for married women rose considerably from less than 50 percent in 1970 to about 70 percent in 1990, which is roughly where it resides today. On the other hand, the LFP rates for never-married males and females have both hovered around the 75 percent mark since the 1970s.

He noted that these findings don’t answer the “which comes first” question, “That is, are people deciding to participate in the labor force based on their living arrangement, or are they choosing their living arrangement based on whether they are members of the labor force?.”

Income

To compare income levels, Vandenbroucke looked at groups of people who are all between 30 and 40 years old, have at least a high school diploma and are working. Similar to the LFP rate comparisons, he compared married males to married females and never-married males to never-married females.

The so-called “gender gap” in income between males and females was apparent among married people. In 1970s, married men earned around 2.5 times more money than married women. The gap narrowed over time, but married men still earned about 1.5 times more than married women in recent years.

Among those who never married, the ratio was much closer to 1, meaning never-married men and women earned nearly the same amount of money at work. Vandenbroucke wrote, “This is more evidence that the arrangement in which people spend their lives has important implications for their economic lives; this is particularly true for women.”

Finally, he compared the earnings of married males to never-married males and married females to never-married females. Married men made about 50 percent more than never-married men over the sample period. Married women made almost 50 percent less than never-married women in 1970, but caught up sometime after 2005 and have earned more than never-married women since.

Conclusion

Vandenbroucke again stressed that this research wasn’t examining causality, but rather that living arrangements and economic lives are correlated. He wrote, “In the end, the lesson from this discussion is that living arrangements are informative about people’s economic lives.”

Notes and References

¹ The married people considered in this article also must have been living with their spouses.

Additional Resources

• Regional Economist: Living Arrangements Matter Not Just to Your Parents but Also to Policymakers
• On the Economy: Fewer Jobs Are Being Created and Being Destroyed
• On the Economy: The Financial Pressures of the Middle Class