Earnings, Marriage, and the Variance of Family Income by Age, Gender, and Cohort

Joseph Altonji, Daniel Giraldo Páez, Disa M. Hynsjö and Ivan Vidangos

No 33122, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: For birth cohorts 1935–44, 1945–62, and 1964–74, we estimate the contribution of education; permanent heterogeneity in wage rates, employment, and hours; labor market shocks; spouse characteristics and shocks; nonlabor income shocks; and marital histories to the age profiles of the variance of family income per adult equivalent. The decompositions are based upon PSID data and Altonji, Giraldo-Páez, Hynsjö, and Vidangos’ (2024) statistical model of earnings, marriage, marital sorting, fertility, and nonlabor income. We find that education and employment heterogeneity are key sources of the rise in the variance with age and across birth cohorts. Hours shocks have grown in importance for women, and employment shocks have grown in importance, especially for men after age 30. The variance contribution of wage heterogeneity is substantial at all ages and has risen across cohorts for women. Own characteristics and shocks matter more for men than women, while spouse characteristics and shocks matter more for women. Gender differences have declined across cohorts.

JEL-codes: D10 D31 J16 J31 (search for similar items in EconPapers)
Date: 2024-11
New Economics Papers: this item is included in nep-gen, nep-lab and nep-ltv
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