Marital Sorting, Inequality and the Role of Female Labor Supply: Evidence from East and West Germany

Nico Pestel

No 786, SOEPpapers on Multidisciplinary Panel Data Research from DIW Berlin, The German Socio-Economic Panel (SOEP)

Abstract: This paper examines to what extent marital sorting affects cross-sectional earnings inequality in Germany over the past three decades, while explicitly taking into account labor supply choices. Using rich micro data, the observed distribution of couples' earnings is compared to a counterfactual of randomly matched spouses. Hypothetical earnings are predicted based on a structural model of household labor supply. For West Germany, a positive effect of marital sorting on inequality is found after adjusting for labor supply behavior, while the effect is limited when earnings are taken as given. This means that there is positive sorting in earnings potential which is veiled by relatively low female labor force participation. In East Germany, the impact of marital sorting on inequality is highly disequalizing irrespective of adjusting for labor supply choices. This is mainly due to the fact that East German women are much more attached to the labor market.

Keywords: Earnings inequality; marital sorting; labor supply; Germany (search for similar items in EconPapers)
JEL-codes: D31 D63 J12 J22 (search for similar items in EconPapers)
Pages: 43 p.
Date: 2015
New Economics Papers: this item is included in nep-eur and nep-lab
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https://www.diw.de/documents/publikationen/73/diw_01.c.513081.de/diw_sp0786.pdf (application/pdf)

Related works:
Journal Article: Marital Sorting, Inequality and the Role of Female Labour Supply: Evidence from East and West Germany (2017)
Working Paper: Marital sorting, inequality and the role of female labor supply: Evidence from East and West Germany (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:diw:diwsop:diw_sp786

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