UNOBSERVABLE INDIVIDUAL EFFECTS, MARRIAGE AND THE EARNINGS OF YOUNG MEN

While there is compelling evidence that married men earn more than unm arried men, the source of this premium remains unsettled. Using panel data from the National Longitudinal Survey of Young Men, we show that much of the premium normally attributed to marriage is associated with unobservable individual effects that are correlated with marital stat us and wages. To the extent there is a gain, it is purely an intercept shift and no more than 5% to 7%. Our findings cast doubt on the inter pretation that marriage enhances productivity through specialization.