Marital Sorting, Household Inequality and Selection

Iván Fernández-Val (), Aico van Vuuren and Francis Vella
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Iván Fernández-Val: Boston University

No 16513, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: marital sorting; inequality; selection (search for similar items in EconPapers)
JEL-codes: C30 J12 J31 (search for similar items in EconPapers)
Pages: 65 pages
Date: 2023-10
New Economics Papers: this item is included in nep-eur and nep-lab
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Working Paper: Marital Sorting, Household Inequality and Selection (2023)
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