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Marital Sorting, Household Inequality and Selection

Author

Listed:
  • Iv'an Fern'andez-Val
  • Aico van Vuuren
  • Francis Vella

Abstract

Using CPS data for 1976 to 2022 we explore how wage inequality has evolved for married couples with both spouses working full time full year, and its impact on household income inequality. We also investigate how marriage sorting patterns have changed over this period. To determine the factors driving income inequality we estimate a model explaining the joint distribution of wages which accounts for the spouses' employment decisions. We find that income inequality has increased for these households and increased assortative matching of wages has exacerbated the inequality resulting from individual wage growth. We find that positive sorting partially reflects the correlation across unobservables influencing both members' of the marriage wages. We decompose the changes in sorting patterns over the 47 years comprising our sample into structural, composition and selection effects and find that the increase in positive sorting primarily reflects the increased skill premia for both observed and unobserved characteristics.

Suggested Citation

  • Iv'an Fern'andez-Val & Aico van Vuuren & Francis Vella, 2023. "Marital Sorting, Household Inequality and Selection," Papers 2310.07839, arXiv.org.
    • Handle: RePEc:arx:papers:2310.07839
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    References listed on IDEAS

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    1. Francine D. Blau & Lawrence M. Kahn & Nikolai Boboshko & Matthew Comey, 2024. "The Impact of Selection into the Labor Force on the Gender Wage Gap," Journal of Labor Economics, University of Chicago Press, vol. 42(4), pages 1093-1133.
    2. Pierre-Andre Chiappori & Monica Costa Dias & Costas Meghir, 2020. "Changes in Assortative Matching: Theory and Evidence for the US," Cowles Foundation Discussion Papers 2226, Cowles Foundation for Research in Economics, Yale University.
    3. Keane, Michael P, 1994. "A Computationally Practical Simulation Estimator for Panel Data," Econometrica, Econometric Society, vol. 62(1), pages 95-116, January.
    4. Pierre-André Chiappori & Bernard Salanié & Yoram Weiss, 2017. "Partner Choice, Investment in Children, and the Marital College Premium," American Economic Review, American Economic Association, vol. 107(8), pages 2109-2167, August.
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    More about this item

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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