The effect of children on male earnings and inequality

Abstract

This study investigates the effect of children on male earnings and how earnings inequality among men arises over the life cycle. We use panel register data on earnings and fertility for sibling brothers and twins, and present estimates from flexible earnings regressions. We find that OLS estimates are confounded by selection effects through family fixed factors. The comparison of twin brothers shows that overall earnings growth does not vary between those who ever become fathers and those remaining childless, and there is no significant effect of children on earnings. We also show that controls for marriage explain only a relatively small part of the effect of children. Men who remain childless and unmarried are on relatively low earnings profiles and therefore contribute significantly to the earnings inequality among men.