When it comes to deciding where to live, many couples face a trade-off between advancing one spouse’s career or the other’s. While early models predict that couples make location decisions to maximize total household income, additional evidence suggests the role of gender norms, particularly among heterosexual couples. In this paper, the authors use data on movers to compare how men’s vs. women’s incomes change when heterosexual couples move.
The authors use administrative data from Germany and Sweden to study this question. In addition to measuring the impact of moving on men’s and women’s earnings, the authors also test how much of the gender earnings gap from moving is due to differential earnings potential versus gender norms. They find the following:
- The authors begin by using an event study: A statistical method used to assess the impact of an event on an outcome of interest to compare men’s and women’s’ earnings immediately following a move. They find that moving increases men’s earnings more than women’s. While men’s earnings increase by about 10% and 5% in Germany and Sweden over the first five years following the move, women experience almost no change in their earnings. This gap arises through a combination of men experiencing an increase in wages and women spending less time in the labor market, particularly in the first year after the move. The gender gap in earnings following a move persists beyond five years and is present across all age groups but is most pronounced for couples who are in their 20s. The authors confirm that this earnings gap is not driven by couples deciding to have a child around the time of a move.
- Building on these results, the authors use mass layoff events to show that heterosexual couples are more likely to move in response to the man being laid off compared to the woman. In Germany, when the man is laid off, the couple’s likelihood of relocating increases by roughly 50% and in Sweden it doubles, while the woman being laid off has no effect on relocation in either country.
- Next, the authors test how much of the gender earnings gap from moving is due to differential earnings potential versus gender norms. They focus on the case of Germany and compare couples who are of East or West German origin, as prior work has shown that women of East German origin have higher labor force participation rates and return to work more quickly following the birth of a child. The authors find that the post-move gender gap in earnings is smaller among German couples when at least one spouse is from East Germany, and is absent among couples in which the man grew up in East Germany. This suggests the role of gender norms in driving the gender earnings gap from moving.
- Building on these results, the authors develop and estimate a model of household decision-making to examine how gender norms versus earnings differences contribute to the gender gap in relocation outcomes. The model predicts that if household decisions were gender-blind, moves should equally benefit men and women with similar earnings. However, the authors’ empirical findings show that in both Sweden and Germany, the gender gap in relocation benefits is smaller when the woman contributes a higher share of household income, but it doesn’t fully close the gap. In Germany, men still benefit more from moves even when women have higher earnings potential, while in Sweden, the gap narrows but women don’t gain significantly more. The results point to a role for gender norms in explaining the gender gap in the returns to joint moves.
This research shows that couples’ moves are not gender blind. Households systematically pass up opportunities to maximize lifetime household income because households behave “as if” income earned by the woman is worth less than income earned by the man. This phenomenon, previously understudied, challenges traditional theories about efficient household decision-making and contributes to persistent gender gaps in the labor market.