Cohabitation Premiums in Denmark: Income Effects in Immigrant–Native Partnerships

Intermarriage with natives has the potential to enhance immigrant integration, as intermarried immigrants gain access to resources such as language skills, information about institutions and customs, and native networks. Due to these spillover effects, immigrants in intermarriages are more likely to be successful in the labour market. However, a positive relationship between intermarriage and economic integration can also be caused by selection based on unobserved characteristics. In previous studies, spillover effects have only been studied from the time of marriage but could occur in a period of cohabitation before marriage. Using unique register data from Denmark, we are able to identify cohabiting couples to analyse both intermarriage and exogamous cohabitation premiums. We study these effects and address selection in a panel data framework, obtaining a time profile of income in relation to the start of cohabitation. Results show comparatively high premiums for male and female immigrants from countries with lower levels of overall economic development and these income increases are directly related to relationship formation.