Joint Utility or Sub-optimal Outcomes? Household Income Development of Same-Sex and Different-Sex Couples Transitioning to Parenthood in Denmark, Finland, Norway, and Sweden

Abstract

Unequal divisions of paid work and care among new parents contribute to increasing inequalities. One explanation for this is joint utility maximization and the benefits of partners (temporarily) specializing in paid work and care. This paper examines the (dis)advantages of specializing compared to dividing tasks more equally by studying whether differences in specialization between same-sex and different-sex couples lead to differences in household earnings after entering parenthood. Using register data from Norway, Finland, Denmark, and Sweden and examining first-time parents, we show that female couples have a more equal within-couple income development during the transition to parenthood than different-sex couples do. However, we find no differences in household income (including or excluding social transfers) between the two types of couples. Although a more equal task division may be preferred from an individual perspective, our results show no evidence of a “best strategy” when it comes to maximizing household income.