The Distribution of Income in Ireland (2000) - Combat Poverty Agency

84 The Distribution of Income in IrelandTable 7.4: Female Employment Rate by Male Earnings,1987-1994Husband's Position inEarnings DistributionHusband an employee in theFirst DecileSecond DecileThird DecileFourth DecileFifth DecileSixth DecileSeventh DecileEight DecileNinth DecileTenth DecileBelow MedianAbove MedianFemale EmploymentRate1987 199424.616.618.620.817.826.719.028.331.723.419.425.7Husband unemployed 20.130.845.745.043.743.247.542.042.938.128.541.739.816.7% Change1987-1994+25+ 175+ 141+ 110+143+78+121+52+20+22+115This change in the pattern of female employment might in itselfbe expected to reduce household income inequality. To get acomplete picture of the contribution of female earnings tohousehold income inequality, though, we also need to knowwhat was happening to the level of earnings of women in differenthouseholds over the 1987-1994 period. Compared to theway participation rates have evolved, this in fact reveals a verydifferent story. The greatest wage increase was among workingwomen married to men with above average earnings, for whomreal wages increased by 17 per cent. In contrast, for womenmanned to men with below average earnings, real wages increasedby only 2 per cent. Women employees married to unemployedmen actually saw their real weekly wage fall over thisperiod (though this is based on relatively few observations). 33^Lne^ l°, be CarefUl* """Preting *e wage figure for women marriedto unemployed men as the estimates are imprecise. This reflects the small+55-17Female Labour Force Participation and Inequality 85These wage changes contributed substantially to the increase inthe correlation between spouses' earnings over the period.If the growth in part-time work was more prevalent amongworkers at the lower end of the distribution, the fall in realweekly wages for women married to unemployed men couldthen simply reflect an increasing proportion of these workersworking shorter weeks. However, the same pattern emergeswhen we look at hourly wages, with the real hourly wage forwomen married to high-earning husbands going up 30 percent, compared to 9 per cent for women married to low earninghusbands and once again a decline for women married to unemployedmen. The female earnings distribution itself becamemore unequal, with the ratio of the top to bottom decile of thefemale wage distribution increasing from 9.3 to 10.4 between1987 and 1994." The impact of increasing participation meansthat if we look at all wives, by contrast, we see a reduction indispersion because there are significantly fewer with no earningsat all.This analysis identifies two channels whereby recent trendsin female labour supply and wages would have worked to actuallyincrease household income inequality. The first is that thewage growth among females has been most pronouncedamong women married to high earning husbands, so the correlationbetween male and female wages has increased. Thisincreased correlation would tend to increase household incomedispersion, other things fixed. Secondly, the distribution of femalewages tends to be much more dispersed than that of maleworkers. As female earnings becomes a more important part ofhousehold income the greater dispersion exhibited within thedistribution of female earnings will tend to feed into the distributionof household income. The changing pattern of femalesample sizes on which the wage changes for this category of worker are calculated.A possible explanation for the faster increase in earnings among womenmarried to men with above average earnings is the increase in returns toeducation which have occurred over this period in Ireland, as described inChapter 6. Given the tendency for couples of similar education levels tomarry we might expect the rise in return to skill to be reflected in fasterearnings growth for women married to high income men.