Looking in Your Partner’s Pocket Before Saying “Yes!" Income Assortative Mating and Inequality

Income assortative mating has seldom been investigated in the literature, mostly because of endogeneity concerns related to simultaneity and omitted variable biases. Using the tax records of a major region in Italy for 2007 to 2011, we first show that income assortative mating is present mostly at very high income levels. In comparison with the median woman, women belonging to the top 1% of their income distribution are about 25 times more likely to get married to men belonging to the top 1% of their income distribution. Second, we show that, even when dealing with simultaneity and omitted variable biases, assortative mating remains significantly larger for very high-earning couples. Finally, we assess the effect of income assortative mating on inequality by assuming random pairing. Our results are consistent with previous results showing that the effects are limited on income inequality as measured by a summary statistic, such as the Gini index. However, by exploiting the large size of our administrative dataset, we show that, when a bivariate partition of the population is considered (e.g. couples with both spouses in the top 1% of their gender-specific distribution), the effect of assortative mating on inequality is huge, as, for the average counterfactual income determined by assuming random pairing, the top income share would be reduced by more than 80%.