Assortative Mating and Labor Income Inequality: Evidence from Fifty Years of Coupling in the U.S

Labor income inequality among couples has increased by 33 percent in the U.S. over the past half-century. Over the same period, the correlation of labor income within couples has also increased sharply. Is this increase in sorting over labor income a cause for the rise of labor income inequality among couples? Using the March supplement of the CPS, first, I find that there has been a sharp increase in positive sorting over labor income in the U.S. in the 1970-2018 period. The top decile of men’s earners married to the top decile of women’s earners has doubled from 10.6 percent in 1970 to 23.3 percent in 2018. Second, I use a bounded copula framework as a reference distribution to track the relative changes in labor income inequality among couples. Using this framework, I find that positive sorting over labor income did play a role in increasing labor income inequality among couples in the 1970-1990 period; however, I find little evidence to suggest that this relationship existed in the 1990-2018 period. (Stone Center on Socio-Economic Inequality Working Paper)