Love and Money: A Theoretical and Empirical Analysis of Household Sorting and Inequality

Raquel Fernandez, Nezih Guner and John Knowles

No 8580, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines the interactions between household matching, inequality, and per capita income. We develop a model in which agents decide whether to become skilled or unskilled, form households, consume and have children. We show that the equilibrium sorting of spouses by skill type (their correlation in education) is increasing as a function of the skill premium. In the absence of perfect capital markets, the economy can converge to different steady states, depending upon initial conditions. The degree of marital sorting, wage inequality, and fertility differentials are positively correlated across steady states and negatively correlated with per capita income. We use household surveys from 34 countries to construct several measures of the skill premium and of the degree of correlation of spouses' education (marital sorting). For all our measures, we find a positive and significant relationship between the two variables.

JEL-codes: D31 I21 (search for similar items in EconPapers)
Date: 2001-11
New Economics Papers: this item is included in nep-dge and nep-ltv
Note: EFG
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (40)

Published as Fernandez, Raquel, Nezih Guner and John Knowles. "Love And Money: A Theoretical And Empirical Analysis Of Household Sorting And Inequality," Quarterly Journal of Economics, 2005, v120(1,Feb), 273-344.

Downloads: (external link)
http://www.nber.org/papers/w8580.pdf (application/pdf)

Related works:
Journal Article: Love and Money: A Theoretical and Empirical Analysis of Household Sorting and Inequality (2005)
Working Paper: Love and Money: A Theoretical and Empirical Analysis of Household Sorting and Inequality (2001)
Working Paper: Love and Money: A Theoretical and Empirical Analysis of Household Sorting and Inequality (2001)
Working Paper: Love and Money: A Theoretical and Empirical Analysis of Household Sorting and Inequality (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:8580

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w8580

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().