Income Pooling and Household Division of Labor: Evidence from Danish Couples

Income Pooling and Household Division of Labor: Evidence from Danish Couples If income pooling indicates primary earners’ willingness to trade part of their income with spouses who earn less and work more in household production, then among specialized couples income pooling will be positively associated with the price of commercial domestic services, substitutes for household production. In line with our prediction, analyses of data from a unique Danish household survey show that complete income pooling is more frequent where commercial domestic services are more expensive. NON-TECHNICAL SUMMARY We find that the higher the wage of unskilled female workers in the region of residence – our proxy for the price of commercial domestic services – the more couples are likely to completely share their income. This finding is limited to specialized couples along traditional gender lines. Our finding suggests that where women perform home production in excess of what their husbands (or partners) do, they get compensated for this extra work in the form of access to extra income earned by their husbands. JEL Classification: D13, D14, J12