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Assortative Mating and Wealth Inequality

Andreas Fagereng, Luigi Guiso () and Luigi Pistaferri
Additional contact information
Andreas Fagereng: BI Norwegian Business School
Luigi Pistaferri: Stanford University

No 2204, EIEF Working Papers Series from Einaudi Institute for Economics and Finance (EIEF)

Abstract: We use population data on capital income and wealth holdings for Norway to measure asset positions and wealth returns before individuals marry and after the household is formed. These data allow us to establish a number of novel facts. First, individuals sort on personal wealth rather than parents’ wealth. Assortative mating on own wealth dominates, and in fact renders assortative mating on parental wealth statistically insignificant. Second, people match also on their personal returns to wealth and assortative mating on returns is as strong as that on wealth. Third, post-marriage returns on family wealth are largely explained by the return of the spouse with the highest pre-marriage return. This suggests that family wealth is largely managed by the spouse with the highest potential to grow it. This is particularly true for households at the top of the wealth distribution at marriage. We use a simple analytical example to illustrate how assortative mating on wealth and returns and wealth management task allocation between spouses affect wealth inequality.

Pages: 57 pages
Date: 2022, Revised 2022-03
New Economics Papers: this item is included in nep-ltv
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