Dynamic Effects of Educational Assortative Mating on Labor Supply

The gender education gap has undergone a transition in the post-war period, from favoring men to favoring women. As a result, in 30% of young American couples, the wife is more educated than the husband. These "married down" women display substantially higher employment rates, relative to women with husbands with the same or higher level of educational attainment. We argue that the interaction between work and marital decisions can explain the higher employment rates of women who marry down. Returns to experience are key in this mechanism, since they lock in early employment choices. We formulate a dynamic life cycle model of marriage and divorce, with endogenous labor supply decisions, and structurally estimate it using NLSY79. We show that returns to experience account for 45% of the employment gap between married down women and married up women. The estimates further suggest that the changes in educational sorting patterns across cohorts can explain 11% of the rise in married women's employment between the 1945 and 1965 cohorts. Finally, we simulate a shift from joint to individual taxation. The model predicts a larger increase in married down women's employment rate. (Copyright: Elsevier)