Marry Your Like: Assortative Mating and Income Inequality

Abstract

Has there been an increase in positive assortative mating? Does assortative mating contribute to household income inequality? Data from the United States Census Bureau suggests there has been a rise in assortative mating. Additionally, assortative mating affects household income inequality. In particular, if matching in 2005 between husbands and wives had been random, instead of the pattern observed in the data, then the Gini coefficient would have fallen from the observed 0.43 to 0.34, so that income inequality would be smaller. Thus, assortative mating is important for income inequality. The high level of married female labor-force participation in 2005 is important for this result.

Trends in earnings inequality and earnings instability among U.S. couples: How important is assortative matching?

“…The differences in trend between the actual and the simulated couples in the PSID are even smaller. Our results are in stark contrast to Greenwood, Guner, Korchakov, and Santos (2014) who find that positive assortative matching can account for the entire increase in household income inequality since 1960. Our results are more consistent with Eika, Mogstad, and Zafar (2014) who report that changes in assortative mating played a minor role in the rise in household income inequality.…”

“…Greenwood, Guner, Korchakov, and Santos (2014) find that an increase in assortative matching on education and earnings makes an important contribution to the increase in inequality between 1960 and 2005. It is possible that by restricting the sample to husbands with non-zero earnings, we may be limiting the impact of matching, particularly if husbands with zero earnings are matched to wives with zero or low earnings.…”

“…Moreover, this type of marital sorting may result in increasing correlation of spouses' earnings as women become more strongly attached to the labor force. Along these lines, Greenwood, Guner, Korchakov, and Santos (2014) find positive assortative matching to have been a major contributing factor to rising household income inequality. Earnings of spouses also may co-vary due to coordinated labor supply decisions.…”

“…We further explore robustness to inclusion of men with zero earnings (in one or more years of the 5-year window) in the sample, making our restrictions similar to those used in Greenwood, Guner, Korchakov, and Santos (2014). Greenwood, Guner, Korchakov, and Santos (2014) find that an increase in assortative matching on education and earnings makes an important contribution to the increase in inequality between 1960 and 2005.…”

“…As women participate in the labor force, the most able women married to the most able men are likely to have higher earnings relative to the less able women married to less able men. These channels are highlighted in a recent paper, Greenwood, Guner, Korchakov, and Santos (2014). In contrast to matching, coordinated labor supply is expected to reduce inequality as women may increase work to compensate for husband's job loss or specialize in home production while husbands specialize in working outside the home.…”