Women’s Employment and Economic Inequality Between Households

Abstract

This article provides an overview of the emerging literature on how trends in women’s employment have affected levels of inequality between households. It also sets the stage for future research endeavors. The rise in female labor force participation, and in conjunction the rise in women’s earnings, has been one of the biggest changes in economic activity in recent decades and in many countries. These long-term trends in women’s employment and associated changes in families are discussed in the section on Family Revolution(s). As such, it is remarkable how little attention mainstream analyses of high and rising levels of economic inequality have paid to gender and women’s employment. The first section, on Economic Inequality: Horizontal versus Vertical Perspectives, sets out the distinction between two perspectives on economic inequality. The first pertains to economic differences between households across the income distribution, referred to as Vertical Economic Inequality. The second pertains to economic differences between groups, such as between women and men, referred to as Horizontal Economic Inequality. The next section, on Integrating Horizontal and Vertical Inequality, demonstrates that levels of vertical inequality are affected by horizontal inequality, in this case specifically applied to how economic differences between households are directly related to economic differences between women and men. There is by now a literature that clearly shows how the rise in women’s employment and earnings (and thus smaller horizontal differences between women and men) reduces vertical inequality between households. This has been demonstrated in a vast amount of Country-Specific Studies as well as in Country-Comparative Studies, a consensus that also resonates in a number of Research Overviews. The next section argues that although it has been convincingly demonstrated that women’s employment and earnings have had an attenuating effect on inequality between households, less is known about how and why this is the case and under which conditions. As such, it combines literature from various fields (including sociology, demography, and economics) to develop a Research Agenda to further the literature on the relationship between women’s employment and economic inequality between households. This section addresses six different questions: Who? is employed and has certain levels of earnings, and with whom do they form a household (With Whom? Homogamy and With Whom? Household Formation). These sections also cover determinants of women’s paid work, such as unpaid care- or housework. The next section covers What Income Effect? can be expected from, for instance, motherhood and housework, and whether these effects vary across the income distribution. The section on What Context? brings into focus the welfare state and public policies, and a final subsection briefly addresses the question of Which Methods? may be particularly effective to further this research agenda. This article concludes by acknowledging a few Outstanding Questions that are less developed in the literature and therefore less integrated into this article—but may nevertheless point to interesting venues for further research.