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The Journal of Socio-Economics 44 (2013) 7– 15

Contents lists available at SciVerse ScienceDirect

The Journal of Socio-Economics

j ourna l ho me page: www.elsev ier .com/ locate /soceco

he type and duration of family unions and income sharing: The implications foromen’s economic well-being

evena Kulic ∗

niversity of Trento, Via Verdi 26, Trento 38122, Italy

a r t i c l e i n f o

rticle history:eceived 18 December 2011eceived in revised form 31 January 2013ccepted 2 February 2013

eywords:

a b s t r a c t

There is a growing tendency to see cohabitation as an equivalent alternative to marriage, and this articleinvestigates how different these two unions are for a woman’s financial satisfaction and income shar-ing in Denmark, France and Great Britain. The analysis suggests that a woman’s financial satisfactiondecreases with cohabitation as opposed to marriage due perhaps to the lack of income pooling of cohab-iters. The paper however finds substantial heterogeneity among married couples; the difference between

ohabitationncome poolinginancial satisfactionarriage duration

marriage and cohabitation is not only a result of the legal protection obtained by the marriage contractbut is better explained by the level of relationship investment in marriage in terms of its duration. Thesystematic comparison of the three institutional frameworks points out that Denmark, as the countrywhere marriage and cohabitation are most equated by law, is surprisingly the country where the relativedifference between marriage and cohabitation for a woman’s financial satisfaction is the greatest. Norelative variation in results is observed between Great Britain and France.

. Introduction

In many countries, cohabitation is quickly replacing marriage asa privileged status signaling adulthood’ (Thornton and Axinn, 2007,. 308). A rising number of individuals decide to put their relation-hips on trial by living together before marriage, while some evenpt for a more radical arrangement and continue to cohabitate for

long period of time without ever changing their legal status.These developments have influenced a significant portion of

esearch on the relation of cohabitation to marriage and on theuality differences between the two. While some authors pointut the superiority of marriage on the material, physical and spir-tual well-being of an individual (Musick and Bumpass, 2012;

aite, 1995), others try to signal personal characteristics of cohab-tants that account for the gap in quality found between the twonions (Brines and Joyner, 1999; Brown and Booth, 1996; Willetts,006). Recently, more empirical attention has been given to thenancial aspects of cohabitation as a distinctive dimension (Dew,011; Heimdal and Houseknecht, 2003; Lyngstad et al., 2010;ropesa et al., 2003; Vogler, 2005; Vogler et al., 2008a, b; Winkler,997). Although both unions are believed to enjoy the benefits of

conomies of scale (Waite, 1995), cohabiting couples are thoughto be using a so-called ‘privatized management system’ that gives

ore independence to each of the partners (Vogler, 2005; Treas,

∗ Tel.: +39 3401147310.E-mail address: nevena.kulic@soc.unitn.it

053-5357/$ – see front matter © 2013 Elsevier Inc. All rights reserved.ttp://dx.doi.org/10.1016/j.socec.2013.02.005

© 2013 Elsevier Inc. All rights reserved.

1993) but also offers less protection and little income sharing. Thismight have negative implications on each partner’s individual eco-nomic well-being, especially when one of them earns significantlyless (Dew, 2011; Vogler, 2005; Elizabeth, 2001).

This study aims to analyze the association between cohabita-tion, income pooling between the partners and women’s economicwell-being. Using the data on financial satisfaction derived from theEuropean Community Household Survey, this study investigateswhether women’s economic well-being and income pooling differbetween married and cohabiting couples, and if so, whether the dif-ference can be better explained by a joint investment in marriage asa function of time, rather than by a sole legal protection obtainedby getting married. More specifically, can we say that the actuallong-term investments matter more for a married couple than aprospect of long-term investments? The legal status of cohabitantsis important in the relation of marriage to cohabitation but it variesconsiderably among countries. By comparing three distinct legalperspectives on cohabitation in Denmark, France and Great Britain,the role of institutional context beyond individual characteristicsis also examined.

In the first section, a short overview of the existing literature andthe central hypotheses are provided. The second part introduces thegeographical framework for the analysis and introduces the major

claims of the article. The third part presents the data, methods andvariables used, and is followed by the elaborate data analyses. Thefinal sections are dedicated to a short discussion and the study’sconclusions.

8 Socio-

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N. Kulic / The Journal of

. Previous findings

Sociological research on the internal organizational structure ofarried couples distinguishes several types of money management

ystems within the family.1 These systems are grouped into col-ective systems where couples behave as a single economic unit,nd privatized systems, where each partner is an individual unitnd may decide either to keep his or her finances fully separate orontribute partially to a joint account (Vogler, 2005). Privatized sys-ems are often found in cohabiting unions as they tend to be basedn more individualistic arrangements (Brines and Joyner, 1999). Inhe analysis of British data, Vogler et al. (2006) showed that a ‘partialool’, where partners contribute an equal part of their individual

ncome to the joint account, is mostly associated with cohabit-ng couples. However, they later argue (Vogler et al., 2008a) that

oney management systems might differ in various types of cohab-ting unions and conclude that cohabiting couples with childrenre actually more similar in their management of money to mar-ied couples, while keeping money separate or partially separateharacterizes mostly childless and post-marital cohabiting cou-les. Similarly, several other studies (Lyngstad et al., 2010; Winkler,997) document exceptions to individualistic behavior when cou-les have children or are in a long-term relationship. In the realmf intra-household economics, privatized management systems arelso linked to a lower economic well-being of the partner who earnsess (Vogler, 2005; Vogler et al., 2006).

Economic empirical evidence on the financial behavior of cohab-tants (Winkler, 1997) focuses on whether greater individual sharef economic resources means higher share and control over cou-le’s expenditures, and it does not consider the executive controlver money. In other words, couples are considered to pool all theirncome if individual consumption is independent of which partnerarns the income. This is often defined as ‘Beckerian pooling’ (Bonkend Browning, 2009) in acknowledgment of the work of Garyecker who first assumed and modeled the presence of resourceooling within (married) couple households (Becker, 1981). This

iterature suggests that cohabiting couples generally do not poolncome, which is in line with the evidence in sociological literaturebove presented. Recent empirical studies (Bonke and Browning,009; Bonke and Uldall-Poulsen, 2007) explain this similarity inesults by emphasizing a high correlation between pooling in eco-omics and a joint pooling system in sociology. In other words,

ndividual incomes are more likely to affect the level of individualontrol over expenditures in households where joint money man-gement is not a common practice (Bonke and Browning, 2009).

In addition, existing research has examined various predic-ors for the likelihood that couples will pool financial resources.his probability has been studied in the context of relevant per-onal and relationship characteristics, such as gender ideology andocio-demographic status (Heimdal and Houseknecht, 2003) or theuration of the relationship and the presence of children (Lyngstadt al., 2010; Bonke and Uldall-Poulsen, 2007; Hamplova and Leourdais, 2009). Many of these studies report that couples areore likely to pool financial resources when they invest more into

he relationship (Lyngstad et al., 2010; Bonke and Uldall-Poulsen,007). The empirical base for including predictors of a relationship

nvestment, such as children, joint property and human invest-

ents, comes from Treas (1993), who has shown that the internal

rganizational structure of marriage as a governing body mayecome more efficient and that income is pooled as a function

1 The most basic classification includes a female whole wage system, a male wholeage system, a housekeeping allowance system and a joint pooling system, although

growing number of studies add another two categories: namely partial pool andndependent management.

Economics 44 (2013) 7– 15

of long-term investments in relationships. Moreover, long terminvestments are directly related to certainty and stability of rela-tionships, which are gained with marriage longetivity (Kuperberg,2012). This approach was applied to the research on cohabiting cou-ples in order to understand whether cohabiting couples do not poolfinancial resources because of a lower level of relationship invest-ment or simply because they lack a legal recognition of their status,which discourages both their future investments and the currentsharing of their financial resources.

In this article, the central hypotheses are derived from the exist-ing empirical evidence on the role of the family union in the poolingof financial resources and on the mechanisms through which thetype of union affects financial behavior of household members. Iexpected to find that cohabitation as opposed to marriage lowersthe economic well-being of women and that it is negatively asso-ciated with income pooling. I also tested if the level of relationshipinvestment in a marriage matters for these associations.

3. Country contexts for cohabitation: evolution and laws

There are significant differences in the way cohabitation evolvesand in how it is legally tackled from one country to another, whichmay influence financial arrangements and other aspects of life in acohabiting union. Kiernan (2001) distinguishes between four stagesin the development of cohabitation; the phenomenon is acceptedby a minority in the first stage, whereas the married and the cohab-itants are ‘indistinguishable’ in the last stage, and they do notdiffer in age or education, religion or traditional values (Nazio,2008). They may equally raise children and perform other socialroles. In addition, when the incidence of cohabitation is high, therespective legislation tends to be more progressive to adapt to newdemographic patterns, and the cohabitants and married are morelikely to have a similar legal status (Perelli-Harris and SanchezGassen, 2012). For instance, countries that are classified as theEuropean forerunners in the legalization of cohabitation also showmuch progress in its diffusion (Drefahl, 2012; Poortman and Mills,2012). Kiernan (2004) makes a detailed distinction within Europeand highlights the experience of the Nordic countries (Denmark,Sweden and Finland) and of France as leaders not only in the diffu-sion of cohabitation but also in the relevant policies; accordingly,Great Britain, Ireland, Germany and Austria are classified as moder-ate in the incidence of cohabitation and its legal acknowledgment,whereas few cohabiting unions and inadequate laws characterizethe countries of Southern Europe.

In this study, three countries are compared. Denmark and Franceare known to be particularly advanced in legalizing cohabitation.Great Britain is an example of a country where quickly growing (butstill moderate) cohabitation is not equally matched with the effortsto legalize it. Moreover, the legal recognition of cohabitation withinGreat Britain slightly differs from one state to another. Denmarkhas gone the furthest in giving rights to an individual, regardless ofwhether the individual is married or cohabiting, through the intro-duction of the ‘individual principle’ in 1987 (Lund-Andersen, 1990).The case of Denmark is intriguing because the law treats cohabit-ing couples as equal to married ones when it comes to taxes, socialsecurity and compensation after the death of one of the partners(Drefahl, 2012; Hamplova, 2009). Similarly, French legislation oncohabitation dates back to the 19th century, but since unmarried

couples in France have been allowed to register their partnershipssince 1999, the cohabitants enjoy a position in welfare rights thatis very much equal to that of the married [24:70], and are entitledto similar rights in terms of taxation (Martin and Théry, 2001)2.

2 The effects of this reform are only partially captured in the ECHP (1994–2001).

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earnings, state benefits and private incomes; they are logged andlagged to refer to the current year, given that the ECHP matchescurrent information with the income obtained in the previous year.

3 Obviously, it is possible that couples jointly manage their money while thehigher earner still controls the consumption, or alternatively, that the couples applyseparate management regimes but still exercise equal control over consumption(Bonke and Browning, 2009). Empirical evidence however points out that joint con-

N. Kulic / The Journal of

ome difference, however, remains between unregistered part-erships and marriage. Finally, French law gives the right to theohabiting partner to obtain certain forms of material protectione.g. maintenance and right to remain in rented apartment) when

relationship ends, independently of whether the partnership isegistered. On the other hand, inheritance or division of propertyfter separation are not regulated by either French or Danish lawor cases of cohabitation (Perelli-Harris and Sanchez Gassen, 2012).lthough cohabiting couples do not have any special status in Greatritain, they do obtain rights to welfare benefits and child supportayments, while the protection of their property derives from theniversal property principle (Barlow, 2008). However, British lawso not offer tax benefits for cohabiting couples, and cohabitantsave no rights to maintenance or property after the union ends.he implication of different institutional perspectives is that mar-ied and cohabiting couples should be more similar in nature inountries where they are more equated by law. More specifically,he differences between them should be smaller in Denmark andrance than in Great Britain. Previous studies have examined theole of institutional and cultural contexts for the financial man-gement of cohabiting and married couples, but they found noignificant country differences (Heimdal and Houseknecht, 2003;amplova and Le Bourdais, 2009). This study addresses similaruestions, but uses longitudinal panel data, which enable a betterontrol of individual characteristics and thus should reveal moren institutional differences.

. Data

The analysis relies on longitudinal micro-data that are drawnrom the eight waves of the European Community Household PanelECHP), from 1994 to 2001. The ECHP is one of the first panel surveyso represent the EU-15, and the data were collected from individualnd household questionnaires with minimal country differences,hich was essential for the international comparisons in this study.s previously mentioned, the longitudinal character of the data islso important for this analysis as it helps to control the unobservedubject-specific heterogeneity. The dataset contains relevant infor-ation on income, employment status and relations, education,

overty measures and subjective indicators of well-being, such asatisfaction with finances, housing, work and leisure.

The sample is restricted to the individuals from Denmark, Francend Great Britain, who at the time of the interview were cohabi-ating (either being divorced, widowed or never married) or were

arried. In addition, multi-generation households and same sexouples are dropped from the sample. Furthermore, the age selec-ion was made for women from 18 to 50, and for men above 18, toxclude women in retirement age independently of national spe-ific laws, and also to focus on the time span in which most of theoman’s productive and reproductive life takes place. The spread of

ohabitation in relatively young cohorts also motivated the choicef the lower age limit.

The final sample is comprised of 24,011 observations for all threeountries: 5174 for Denmark, 9129 for France, and 9708 for thereat Britain.

. Method

The earlier review of the literature presented two approacheso study income pooling in the households: ‘Beckerian’ pool-ng in economics (Bonke and Browning, 2009) and the joint

oney management system in sociology (Pahl, 1983; Vogler, 1998;ogler and Pahl, 1994). Here, I focused on the first method and

ested whether the economic well-being of married and cohabit-ng women depends on the proportion of household income that

Economics 44 (2013) 7– 15 9

a woman earns. However, a rejection of the ‘Beckerian’ poolinghypothesis would also provide insight into the potential finan-cial organization of couples, given the close link between the twoapproaches (Bonke and Browning, 2009)3.

Economic well-being is measured by financial satisfaction.Although individual economic well-being can be studied on variousindividually assignable outcomes, such as individual income andconsumption, a growing economic and social literature (McBride,2001; Praag et al., 2003) recognizes that subjective measures ofhuman well-being may give the best judgment of one’s individualconditions (Frey and Stutzer, 2002). Thus, the dependent variable isthe probability that a woman is financially satisfied in a given year.The question: ‘How satisfied are you with your financial situation?’offers 6 ordinal responses in which level 1 is not at all satisfiedwith one’s financial situation and level 6 is fully satisfied withone’s financial situation.4 The lack of (Beckerian) income pooling isreflected in a positive impact of women’s income contributions ontheir financial satisfaction net of household income. A multilevelproportional odds model is applied because it has the advantage ofcorrecting for subject heterogeneity by clustering ordinal responsesfrom individuals and modeling individual effects (Rabe-Heskethand Skrondal, 2008). In this multilevel framework, occasions are thefirst level while the individual characteristics represent the secondlevel.

The following models5 are specified for the analysis, where S isa woman’s financial satisfaction, i denotes occasions (time) and jcouples.

Logit {Pr ( Sij > s∣∣Xij, �1j)} = Iijˇi + Cijˇc + X2ijˇtv

+ X3jˇti + �1j − ks

Logit {Pr ( Sij > s∣∣Xij, �1j)} = Iijˇi + Cijˇc + X2ijˇtv

+ X3jˇti + IijCijˇint + �1j − ks

Logit {Pr ( Sij > s∣∣Xij, �1j)} = Iijˇi + Mdjˇmd + X2ijˇtv

+ X3jˇti + �1j − ks

Logit {Pr ( Sij > s∣∣Xij, �1j)} = Iijˇi + Mdjˇmd + X2ijˇtv

+ X3jˇti + IijMdjˇint + �1j − ks

With the random intercept of the cumulative logits �1j | Xij − N(0, �), where �1j is independent across couples, s and ks representordinal response categories and thresholds, while X2ij and X3j arevectors of time variant and time invariant individual and couplecharacteristics. Iijˇi indicates a woman’s income share as a ratio offemale income to total household income divided by 10 (relativeincome effect). The incomes are a sum of all entrances including

trol over money mostly follows joint control of consumption (Bonke and Browning,2009; Bonke and Uldall-Poulsen, 2007).

4 The ECHP derives the data for Great Britain from the British Household PanelSurvey (BHPS), so that a five level scale applies instead.

5 This article uses a generalized linear model formulation.

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ijˇc is a measure of partnership status at the time of each interviewtime varying), which can be either cohabitation (1) or marriage (0).djˇmd is a proxy for relationship investment (Treas, 1993) and

hows duration of marriage in the first wave in which the individ-al participated and is updated each times the relationship statushanges (partially time invariant). Married women are divided into1) those in recently married, up to one year, (2) those in ‘short’

arriages, from one up to ten years and (3) women in ‘long’ mar-iages, above ten years, and are compared to cohabiting women.he duration of marriage was chosen because couples bind togethern time, both fiscally and emotionally, simplifying their economicrganization (Oropesa et al., 2003) and making it less risky to accu-ulate capital (Pollak, 1985). The design of the data however did

ot allow for further distinctions within cohabitation according tohe actual duration of the relationship, but this should not criticallyistort the results, as cohabitations often tend to have a shorteruration (Kiernan, 2004; Bumpass and Sweet, 1989). IijCijˇint and

ijMdjˇint are interaction terms between the main independentariables: a woman’s income share and partnership statuses. Theodels without interaction terms provide a general picture of the

ffect of partnerships on financial satisfaction, whereas the modelith interaction terms point to the differences in income sharing

etween married and cohabiting couples.Furthermore, the regression analysis includes a number of

ontrolling variables which account for the differences betweenarried and cohabiting couples. For instance, household income,

ge of partners and children are included as continuous variables.hile household income controls for the absolute income effect,

ge is important for the individual decision to enter a cohab-tation union or a marriage, given that cohabitation in Europes more prevalent among the young (Kiernan, 2001, 2004). Chil-ren are included for their confounding effect on the relationshipetween partnership status and financial satisfaction; they arelso associated with the strength of the relationship (Hamplovand Le Bourdais, 2009). In addition, cohabitation is regarded as aighly egalitarian relationship with similar levels of education andccupational status between partners (Nazio, 2008; Schoen andeinick, 1993). Thus, a variable showing educational attainment

ISCED6) and a variable based on a combination of the ISCED lev-ls, which measures the educational gap between the partners, arelso introduced; in the latter, women are classified either as mar-ied down (better educated than their partners), married up (lessducated than their partners) or in educational homogamy. Theegression also incorporates employment status to control for theffect of work on relationship choices as young and emancipatedorking women often prefer cohabiting unions over marriages

Brines and Joyner, 1999; Kuperberg, 2012); the individuals areivided into employed, unemployed and inactive. The occupationallass of both partners (5 scale ESeC classification) refers to therst wave in which an individual participated and is measuredccording to the five-category ESeC7 class scheme. The long-termnemployed8 are treated as a separate category. This measureas been argued to relate closely to partnership status becauseohabitation may be a sign of disadvantaged material conditions,

nd is therefore more prevalent in lower occupational classesCarlson et al., 2004; Smock et al., 2004). On the other hand,ome authors argue that cohabitation prior to marriage is more

6 ISCED 0/2 incorporates all levels up to lower secondary education; ISCED 3 referso upper secondary education, while ISCED 5/7 corresponds to post-secondary (nontertiary) and tertiary education.

7 The classification includes managers and professionals, intermediate and lowerupervisory workers, small employers and own account workers, white collar andlue collar workers.8 These are individuals who never worked or whose employment cannot be traced

n the dataset.

Economics 44 (2013) 7– 15

likely to be embraced by high occupational classes (Ermisch andFrancesconi, 2000). Finally, financial hardships may also influencethe associations between cohabitation and financial satisfactionwhen cohabitation is preferred to marriage due to material hard-ship. The regression controls for period effects (time dummies).

A separate regression is run for each country to obtain predictorsfor each institutional context, whereas the strength of the effectsbetween countries is tested on a pooled sample with interactionsbetween countries and the main independent variables.

6. Results

Table A1 shows that cohabitation is more prevalent in Denmarkwhile fewer cohabiting unions were found in Great Britain andFrance. For this reason, a smaller percentage of women are singleor married in Denmark in comparison to the other two countries.Partnership status seems to be relevant for individual financial sat-isfaction in all countries, since women who are not living in a coupleare on average less financially satisfied than women living in a cou-ple. This result is probably associated with the benefits of sharingexpenses in partnerships (Huang et al., 2011). However, the levelsof individual financial satisfaction show cross-country variation,and women are on average more financially satisfied in Denmarkand France (Table A2).

Table A3 presents the mean and standard deviations of the vari-ables for cohabiters and those legally married by the laws of a givencountry. The differentiation of the women living in a couple oncohabiting and married suggests that there is some heterogeneitywithin the group, and married women are more financially satis-fied that cohabiting women. Cohabiting couples tend to be youngerand have fewer children than those who are married, and they aremore likely to have lower household incomes than married cou-ples have. In all the studied countries, a higher household incomeof married couples is more a result of higher married men’s earn-ings relative to male cohabiters than married women’s earningsrelative to their cohabiting counterparts, while in Denmark, mar-ried women earn more than their female cohabiters. This impliesthat marriage relates to financial security (Smock et al., 2004),either because it presents an economic shelter for women (Vogler,2005) or because the economic well-being of a couple may be aprecondition for marriage (Dew, 2011; Oppenheimer, 1988). Com-pared to married women, cohabiting women in France and GreatBritain are better educated and contribute more to the householdfinances. In Denmark, on the contrary, monetary contributions ofwomen do not depend on the type of union, and these contrib-utions are comparatively higher than in Great Britain and France.In addition, married Danish women tend to be more educated andbetter positioned in the labor market than female cohabiters. Longmarriages are the most rare in Denmark and the most common inFrance.

Table A4 examines in more detail the observed differencesin financial satisfaction of married and cohabiting women, andpresents the odds ratios of the regression of the probability thata woman is financially satisfied in a couple. In model 1, a woman’sincome share and a woman’s partnership status are regressedover financial satisfaction, net of all control variables. As expected,cohabitation is negatively associated with the probability of finan-cial satisfaction in all three countries even after accounting for theeffect of the composition of the sample; for cohabiting women, theodds of financial satisfaction are 75% as large as the odds of mar-ried women in Denmark and around 70% as large as the odds of

married women in France and Great Britain. In other words, thedata imply that marriage is a more beneficial union than cohab-itation for a woman’s financial satisfaction; therefore, it tends tobe more efficient as a governing structure (Williamson, 1981). This

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odel also indicates that, in Denmark, the odds of a woman’s finan-ial satisfaction increase as the woman’s income share increases,lthough the effect is only significant at 10%. The hypothesis ofncome pooling is, however, not rejected in France and Greatritain, where a woman’s income contribution does not seemo influence her financial satisfaction, net of household income;verall, couples seem to pool their economic resources in theseountries. Yet, 36–40% of the unexplained variation of financialatisfaction in the data is due to unobserved individual characteris-ics, which necessitates some caution in the interpretation of theseesults.

The pooled model for all the three countries9 reports that thenteraction of union type by country is significant for Denmark

hile no significant difference is observed between France andreat Britain. In other words, Danish female cohabiters experi-nce a greater decrease in financial satisfaction than do Frenchnd British cohabiting women. On one hand, this is a rather unex-ected result given that the Danish approach to cohabitation isne of the most advanced in Europe and because I hypothe-ized that the smallest difference between cohabiting and marriedomen would be in Denmark as a result. On the other hand,

his is consistent with the descriptive statistics shown earlierhich reveal that married couples in Denmark are a rather select

roup, many of whom decide to get married after reaching aigher level of certainty (and also professional and financial secu-ity), which seems to be of less importance in the other twoountries.

Model 2 tests to see if there are different patterns in incomeharing between married and cohabiting women. I add the inter-ction of income share by the type of union (cohabitation), whichnly slightly improves the model. For Denmark, Great Britain andrance, the interaction is positive and significant, thus showinghat cohabiting women are less likely to pool income while theath for married women is the opposite. Four groups of women are

dentified for the analysis:

Cohabiting women with incomeCohabiting women with no incomeMarried women with incomeAnd married women with no income.

Cohabiting woman have 1.28 times higher odds of being finan-ially satisfied for each 10% of their income share in Denmark andre 1.15 or 1.10 times more likely to be financially satisfied withvery 10% of their income share in France and Great Britain, respec-ively. As the results point out, the behavior of cohabiting womenalls well into the bargaining framework as most of the associ-tion between income share and financial satisfaction is foundmong cohabiting women. On the contrary, income share seemsot to be a good predictor of the financial satisfaction of marriedomen since the coefficient is statistically insignificant in all three

ountries. Furthermore, the model reveals that married, inactiveomen tend to do better financially than their cohabiting coun-

erparts; married women with no income have from two (France,reat Britain) to around four times (Denmark) higher odds of beingnancially satisfied than cohabiting women who do not earn any

ncome. These results raise important questions about the protec-ion that cohabitation offers to non-working women and are in line

ith the literature that sees marriage as the only source of sta-

us and security for non-working women (Vogler, 2005; England,000).

9 The model is available upon request.

Economics 44 (2013) 7– 15 11

For cohabiting unions, the strength of the effect of the rela-tive woman’s income share on financial satisfaction does not differamong the three countries, so that various levels of legal recogni-tion of cohabitation are not associated with relative changes in thefinancial behavior of the cohabitants. This finding supports the ear-lier studies of Heimdal and Houseknecht (2003) and Hamplova andLe Bourdais (2009).

Table A5 introduces the role of relationship investment in mar-riage in terms of duration of marriage to study the differencesobserved between the two unions. There is heterogeneity withinmarital unions in terms of their longetivity, and longer marriagesmight explain differing financial satisfaction of cohabiting and mar-ried women.

Indeed, the likelihood that a woman is financially satisfiedincreases almost hierarchically the longer the marriage lasts, show-ing that the variation between the unions is likely to come fromthe joint investment in the relationship (model 3). However, thosewomen whose marriages have not yet reached their one-yearanniversary also experience higher odds of financial satisfactionthan do cohabiting women, with the exception of Denmark wherethe effect of one year of marriage, although positive, is statisticallyinsignificant. The differences encountered among the countrieswith respect to the effect of one-year marriages may be due tothe legal treatment of cohabitation, which is more favorable andbrings more certainty to cohabiting couples in Denmark than inother countries. In France and Great Britain, the legal contract in theform of marriage seems to make a difference, even at the beginningof the marriage: the recently married are 1.3 times more likely thancohabiters to be financially satisfied in France and 1.4 times morelikely to be financially satisfied in Great Britain, excluding control-ling factors. However, the pooled sample (available upon request)reports that the positive effect of marriages that have lasted oneto ten years and marriages that have lasted over ten years is thestrongest in Denmark relative to other countries, while this doesnot apply to the ‘just’ married; there is no difference in the strengthof coefficients for one-year marriages. This finding may indicatethat the small legal difference between marriage and cohabitationin Denmark selects only highly motivated people into marriage:those likely to stay together for a long period of time and investsubstantially in the relationship.

The results of the interaction between a woman’s income shareand variables of marriage durations in model 4 show that the like-lihood of pooling resources also increases over time with highermarriage investments in Denmark, France and Great Britain. It isprobably the duration of marriage that accounts for the evidenceof income pooling in the overall sample (model 1 and 3). In otherwords, as time passes, it is difficult to distinguish between indi-vidual and collective contributions; consequently, the change infinancial satisfaction as a result of personal income decreases withevery year of marriage. Cohabiting women are less likely to poolincome in all three countries, but this is also true for the recentlymarried women in Denmark (the odds ratio is 1.06). As previouslysuggested, the initial difference between married and cohabit-ing women in Denmark is practically non-existent, but these twogroups tend to diverge over time. This is not the case in othercountries where marriage itself, even if in place for a short time,is likely to affect the internal organizational structure and incomepooling. However, the three term interactions between a woman’sincome share, marriage duration and country are not significant,showing no relative difference in the strength of coefficients amongthe studied countries.

An interesting result is observed when the predicted odds of

financial satisfaction for non-working married women are com-pared to the odds of non- working cohabiting women. In Denmark,the ratio of the odds between the two groups vary from 2.49(one year marriage) to 6.81 (ten year marriage) in favor of

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arried women while the range is more moderate in the otherwo countries. In other words, the longer the marriage has been inlace, the more secure non-working women become compared toheir cohabiting counterparts.

. Discussion and conclusions

The objectives of this article were threefold. The first objectiveas to shed some light on how cohabitation influences a woman’s

conomic well-being, seen as her individual financial satisfaction.he article has shown that marriage compared to cohabitation isore likely to increase a woman’s financial satisfaction. The sec-

nd objective was to investigate the existence of income poolingithin couple households and to understand whether there is a dif-

erence in financial behavior of cohabiting and married couples thatccounts for a lower efficiency of cohabiting unions. The analysisevealed that cohabitants are more likely to rely on market-basedxchanges and bargaining in order to control financial resources.n other words, married couples are more likely to pool finan-ial resources compared to cohabitants, but the character of thisata did not allow for specific conclusions on money manage-ent systems and financial organization of the household. The

ncome pooling of cohabiting and married couples is studied indi-ectly through the effect of women’s relative income contributionsincome reorganization) on their financial satisfaction. Therefore,hese results are suggestive about the control of money but notonclusive in terms of what the exact financial arrangement ofohabiting couples is.

The third objective was to look at the heterogeneity within mar-iages in terms of their duration, and compare marriage investmentnd the legal marriage contract in the roles that they play in dif-erentiating marriages from cohabitations. The findings indicatehat the differences found between cohabiting and married cou-les on a woman’s economic well-being and income pooling mostlyesult from the time component and from the joint investment inarriage. However, it has been shown that the legal contract ofarriage is also important as it may raise the cost of the relation-

hip, thus influencing income pooling. This is particularly relevantor countries where the legal status of cohabitants and the mar-ied are more unequal. For instance, in Denmark, the differencesn economic well-being between cohabiting and recently married

omen are hardly observable, and in France, they are smallerhan in Great Britain, which lags behind in terms of recognitionor cohabitation. However, the results are rather surprising whenarious institutional perspectives are compared relative to onenother; despite the most favorable legislation for cohabitants,eing and remaining married makes the greatest difference foromen in Denmark compared to the other two countries. Oneossible interpretation of this result is that the small legal dif-erence between marriage and cohabitation in Denmark makeshe marriage an option for highly motivated and financially set-

led couples, who usually cohabitate until they are more certainbout their future commitment. Certainly, one of the disadvan-ages of this dataset is the lack of data on the length of cohabitingnions, which would enable a better distinction between the

able A1artnership status (women, age 18–50).

Partnership status (%) Denmark

Married 49.39

Cohabiting 25.32

Widowed, divorced or separated 6.54

Single 18.74

ource: ECHP, 1994–2001.

Economics 44 (2013) 7– 15

unions. Here, all cohabitants are taken as a homogenous group fol-lowing the literature that highlights the temporary character ofcohabitation and its short duration (Kiernan, 2001; Ermisch andFrancesconi, 1998). But future research should also consider theconsequences of long term cohabitation for individual economicwell-being.

Another important implication of the analyses in this article con-cerns the position of non-working women in cohabiting unions. Aspreviously mentioned, the literature on the internal financial orga-nization of cohabiting couples reports the use of privatized systemsof money management in cohabitation. On one hand, such organi-zation is fairly beneficial for women as they are more independentin their decisions and have more discretion in personal expendi-tures. On the other hand, privatized systems work well only if equalcontributions are not a burden for either of the members because,as Vogler [11:18] argues, ‘when one partner earns more than theother, the higher earner (usually the male partner), tended (tends)to have more control over money as well as greater access to themoney for their own use’. In other words, if a cohabiting womanearns little or no income, the principle of independent financesmeans that she cannot rely on her partner as much as she wouldif they pooled their income; consequently, she will be worse offfinancially in comparison to the inactive married women. In addi-tion, since marriage traditionally relies more on specialization andtrading than cohabitation (Brines and Joyner, 1999; Poortman andMills, 2012), and specialization increases with longer marriages(Kuperberg, 2012), it is more likely that being out of the labormarket is less of a disadvantage for a married woman than a cohab-iting woman because wives may specialize in domestic work. Basedon the data for individual financial satisfaction, the results in thisarticle seem to support these theoretical views in more than onegeographical context.

To sum up, the analyses suggest that the legal character ofmarriage as an ‘initial investment’ is still important for bothwomen’s economic well-being and income pooling, especially inthe countries where the legal burden of marriage is high. Fur-thermore, the results show that, independently of geographicalsetting, the marriage contract provides substantial economic secu-rity for non-working women. However, the principle componentthat explains the positive impact of marriages on women’s eco-nomic well-being and income pooling, as the results reveal, is notthe idea of long-term investment in the form of a contract but theinvestment itself. Whereas there are differences between the threeinstitutional frameworks, the direction of this study’s comparativeconclusions is rather counter-intuitive: the country where mar-riage and cohabitation are most equated by law is also the countrywhere the relative difference between the financial satisfaction ofwomen in marriages and of women in cohabitating unions is thegreatest.

Appendix A.

See Tables A1–A5.

France United Kingdom

53.86 53.0515.09 15.89

5.89 8.6625.16 22.40

N. Kulic / The Journal of Socio-Economics 44 (2013) 7– 15 13

Table A2ECHP values on women’s financial satisfaction between 1994 and 2001, by partnership status and country (age 18–50).

Financial satisfaction (1–6) Denmark France United Kingdom

Mean 4.40 3.61 3.88Living as a couple (married or unmarried) SD 1.22 1.24 0.95

n 8507 19967 15894Mean 3.79 3.22 3.50

Not living as a couple SD 1.44 1.37 1.06

S

TD

SN

n

ource: ECHP, 1994–2001.

able A3escriptive statistics of the final sample by the type of union and country.a

Means and SD of variables Denmark

Married Cohab.

Fin.sat. (1–6) 4.55 (1.18) 4.18 (1.23)

% of woman’s share of income 44. 81 (13.21) 45.24 (12.44)

Duration of marriageMarried 1 year 0.19 (0.39)Married 1–10 years 0.42 (0.49)

Married >10 years 0.39 (0.49)

Woman’s employmentEmployed 0.85 (0.35) 0.74 (0.43)

Unemployed 0.05 (0.22) 0.06 (0.25)

Inactive 0.10 (0.29) 0.19 (0.39)

Woman’s yearly income (mean only) 18,049.74 15,379.60

Female educationIsced 5–7 0.41 (0.49) 0.26 (0.44)

Isced 3 0.42 (0.49) 0.54 (0.50)

Isced 0–2 0.17 (0.37) 0.20 (0.40)

Male EducationIsced 5–7 0.37 (0.48) 0.28 (0.45)

Isced 3 0.46 (0.50) 0.53 (0.50)

Isced 0–2 0.17 (0.37) 0.19 (0.39)

Woman’s occupational classa

Esec1 0.33 (0.47) 0.24 (0.43)

Esec2 0.28 (0.45) 0.24 (0.43)

Esec3 0.03 (0.18) 0.01 (0.11)

Esec4 0.20 (0.40) 0.26 (0.44)

Esec5 0.13 (0.33) 0.17 (0.38)

Man’s occupational classa

Esec1 0.42 (0.49) 0.30 (0.47)

Esec2 0.16 (0.37) 0.20 (0.40)

Esec3 0.05 (0.22) 0.04 (0.21)

Esec4 0.05 (0.22) 0.08 (0.28)

Esec5 0.31 (0.46) 0.34 (0.47)

Woman’s age 38.29 (6.74) 30.22 (7.13)

Man’s age 41.11 (7.47) 32.55 (7.62)

Household income (mean only) 44,560.4 37,619.96

Number of children 1.36 (1.10) 0.77 (0.95)

N 3566 1608

ource: ECHP, 1994–2001.ote: The category inactive for United Kingdom contains also the unemployed.a Selected categories.

2879 8991 7162

France United Kingdom

Married Cohab. Married Cohab.

3.59 (1.24) 3.49 (1.25) 3.92 (0.92) 3.82 (0.95)

31.49 (20.64) 38.2(18.34) 33.39 (18.71) 40.76 (17.31)

0.09 (0.28) 0.17 (0.37)0.31 (0.46) 0.35 (0.48)0.60 (0.49) 0.48 (0.50)

0.64 (0.48) 0.66 (0.47) 0.76 (0.43) 0.79 (0.41)0.08 (0.28) 0.12 (0.32) 0 00.28 (0.45) 0.22 (0.41) 0.24 (0.43) 0.21 (0.41)

10,979.88 11,383.33 9586.08 10,725.93

0.23 (0.42) 0.31 (0.46) 0.39 (0.49) 0.54 (0.50)0.42 (0.49) 0.35 (0.47) 0.15 (0.36) 0.10 (0.30)0.35 (0.48) 0.34 (0.47) 0.46 (0.50) 0.35 (0.48)

0.22 (0.42) 0.22 (0.42) 0.51 (0.50) 0.54 (0.50)0.48 (0.50) 0.38 (0.48) 0.13 (0.33) 0.12 (0.33)0.29 (0.45) 0.39 (0.49) 0.36 (0.48) 0.33 (0.47)

0.18 (0.39) 0.20 (0.40) 0.28 (0.45) 0.26 (0.44)0.28 (0.45) 0.26 (0.44) 0.23 (0.42) 0.26 (0.44)0.06 (0.23) 0.03 (0.17) 0.04 (0.20) 0.02 (0.14)0.17 (0.38) 0.21 (0.41) 0.24 (0.43) 0.24 (0.42)0.15 (0.36) 0.15 (0.36) 0.14 (0.34) 0.11 (0.32)

0.32 (0.46) 0.24 (0.43) 0.37 (0.48) 0.32 (0.47)0.22 (0.41) 0.23 (0.42) 0.17 (0.37) 0.17 (0.38)0.1 (0.30) 0.04 (0.21) 0.14 (0.35) 0.09 (0.29)0.04 (0.19) 0.05 (0.22) 0.04 (0.19) 0.05 (0.22)0.30 (0.46) 0.37 (0.48) 0.26 (0.44) 0.29 (0.45)

38.05 (7.06) 31.95 (7.10) 37.39 (7.07) 29.96 (7.50)

40.88 (7.93) 34.5 (8.08) 40.03 (8.35) 32.47 (8.33)

33,742.63 29,057 33,674.9 31,178.68

1.37 (1.14) 1.04 (1.05) 1.31 (1.12) 0.70 (0.98)

6928 2201 7645 2063

14 N. Kulic / The Journal of Socio-Economics 44 (2013) 7– 15

Table A4Random intercept proportional odds model (selected variables).a

The regression of partnership status and woman’s share of income on financial satisfaction

Dependent variable Denmark France United Kingdom

Financial satisfaction Est(95%CI) Est(95%CI) Est(95%CI)

Fixed part: odds ratios (1) (2) (1) (2) (1) (2)Woman’s share of income 1.05 (0.99, 1.12)* 0.97 (0.91, 1.04) 1.00 (0.97, 1.03) 0.97 (0.93, 1.01) 1.01 (0.97, 1.06) 0.99 (0.95, 1.04)Household income 2.57 (1.97, 3.36)*** 2.57 (1.97, 3.35)*** 2.18 (1.86, 2.55)*** 2.16 (1.84, 2.53)*** 3.18 (2.7, 3.75)*** 3.19 (2.7, 3.8)***

Employment statusWorking 2.81 (2.11, 3. 73)*** 2.80 (2.10, 3.72)*** 3.01 (2.49, 3.65)*** 3.02 (2.49, 3.66)*** 1.57 (1.33, 1.85)*** 1.57 (1.33, 1.86)***

Inactive 1.66 (1.21, 2.29)*** 1.67 (1.22, 2.30)*** 3.28 (2.69, 4.01)*** 3.23 (2.65, 3.95)*** Ref. Ref.Number of children 0.87 (0.80, 0.94)*** 0.87 (0.80, 0.94)*** 0.94 (0.89, 0.99)** 0.94 (0.89, 1.00)** 0.82 (0.77, 0.88)*** 0.82 (0.76, 0.87)***

Partnership statusCohabitation 0.75 (0.62, 0.92)*** 0.25 (0.14, 0 .43)*** 0.71 (0.60, 0.84)*** 0.42 (0.30, 0.57)*** 0.69 (0.57, 0.82)*** 0.47 (0.33, 0.68)***

Cohabitation × share 1.28 (1.14, 1.43)*** 1.15 (1.07, 1.23)*** 1.10 (1.01, 1.19)**

Fixed part: thresholdsk1: 6.27 5.76 3.33 3.11 3.39 3.35k2: 7.71 7.20 4.6 4.38 5.50 5.46k3: 9.29 8.79 6.7 6.5 8.89 8.84k4: 11.31 10.81 9.02 8.8 12.53 12.49k5: 13.99 13.49 12.84 12.63Random part� 1.86 (0.16) 1.82 (0.15) 1.79 (0.11) 1.80 (0.11) 2.34 (0.14) 2.33 (0.14)Log likelihood −6720.45 −6711.34 −11927.17 -11919.43 −8988.23 −8985.56N 5174 5174 9129 9129 9708 9708

Note: The category inactive for United Kingdom contains also the unemployed.a Regression analyses also include age of partners, education levels and educational differences between partners, occupational class of partners, financial hardship and

time dummies.* Significant at 10%.

** Significant at 5%.*** Significant at 1%; source: ECHP, 1994–2001.

Table A5Random intercept proportional odds model (selected variables).a

The regression of marriage duration and woman’s share of income on financial satisfaction

Dependent variable Denmark France United Kingdom

Financial satisfaction Est(95%CI) Est(95%CI) Est(95%CI)

Fixed part: odds ratios (3) (4) (3) (4) (3) (4)

Woman’s share of income 1.05 (0.99, 1.12)* 1.25 (1.14, 1.38)*** 1.00 (0.97, 1.04) 1.11 (1.05, 1.19)*** 1.01 (0 .97, 1.06) 1.10 (1.02, 1.19)**

Household income 2.60 (1.99, 3.39)*** 2.60 (1.99, 3.39)*** 2.17 (1.86, 2.54)*** 2.14 (1.83, 2.51)*** 3.18 (2.7, 3.75)*** 3.18 (2.7, 3.75)***

Employment statusWorking 2.79 (2.10, 3.70)*** 2.77 (2.08, 3.69)*** 3.0 (2.47, 3.63)*** 3.01 (2.49,3.65)*** 1.57 (1.33, 1.85)*** 1.57 (1.33, 1.86)***

Inactive 1.66 (1.21, 2.28)*** 1.66 (1.21, 2.29)*** 3.30 (2.70, 4.03)*** 3.26 (2.67, 3.98)*** Ref.Number of children 0.87 (0.80, 0 .94)*** 0.86 (0.80, 0.94)*** 0.93 (0.88, 0.99)** 0.94 (0.89, 1.00)** 0.81 (0.76, 0.87)*** 0.82 (0.76, 0.87)***

Relationship durationMarried 1 year 1.21 (0.95, 1.53) 2.49 (1.14, 5.45)** 1.30 (1.03, 1.63)** 1.75 (1.07, 2.85)** 1.40 (1.13, 1.74)*** 1.55 (0.96, 2.50)*

Married 1–10 years 1.40 (1.08, 1.81)*** 3.85 (1.86, 7.97)*** 1.36 (1.11, 1.67)*** 2.28 (1.57, 3.32)*** 1.53 (1.21, 1.94)*** 2.61 (1.68, 4.04)***

Married >10 years 1.55(1.12, 2.13)*** 6.81 (3.38, 13.74)*** 1.66 (1.33, 2.07)*** 2.94 (2.06, 4.20)*** 1.50 (1.13, 1.98)*** 2.22 (1.42, 3.48)***

Married 1 year x share 0.85 (0.72, 1.00)* 0.93 (0.83, 1.04) 0.98 (0.88, 1.10)Married 1–10 years × share 0.80 (0.69, 0.93)*** 0.87 (0.80, 0.95)*** 0.87 (0.79, 0.96)***

Married >10 years × share 0.72 (0.63, 0.83)*** 0.86 (0.80, 0.92)*** 0.90 (0.82, 0.99)**

Fixed part: thresholdsk1: 6.5 7.16 3.44 3.75 3.76 4.11k2: 7.94 8.6 4.71 5.02 5.87 6.22k3: 9.53 10.18 6.82 7.14 9.25 9.61k4: 11.55 12.21 9.13 9.45 12.90 13.25k5: 14.22 14.88 12.94 13.27Random part� 1.86 (0.16) 1.80 (0.15) 1.79 (0.11) 1.80 (0.11) 2.34 (0.14) 2.32 (0.14)Log likelihood −6719. 50 -6708.28 -11924.8 -11916.19 -8988.02 -8983.06N 5174 5174 9129 9129 9708 9708

Note: The category inactive for United Kingdom contains also the unemployed.a Regression analyses also include age of partners, education level and educational differences between partners, occupational class of partners, financial hardship and

time dummies.* Significant at 10%.

** Significant at 5%.*** Significant at 1%; source: ECHP, 1994–2001.

Socio-

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