In this paper we investigate the effect of relative income on marital status. We develop an identity model based on Akerlof and Kranton (2000) and apply it to the marriage decision. The empirical evidence is consistent with the idea that people are more likely to marry when their incomes approach a financial level associated with idealized norms of marriage. We hypothesize that the marriage ideal is determined by the median income in an individual’s local reference group. After controlling flexibly for the absolute level of income and a number of other factors, the ratio between a man’s income and the marriage ideal is a strong predictor of marital status but only if he is below the ideal. For white men, relative income considerations jointly drive coresidence, marriage, and fatherhood decisions. For black men, relative income affects the marriage decision only, and relative income is tied to marital status even for those living with a partner and children. Relative income concerns explain 10-15 percent of the decline in marriage since 1970 for low income white men, and account for more than half of the persistent marriage gap between high- and low-income men.
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Paper provided by Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Research on Child Wellbeing. in its series Working Papers with number
1141.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Douglas Miller & Christina Paxson, 2001.
"Relative Income, Race, and Mortality,"
Working Papers
269, Princeton University, Woodrow Wilson School of Public and International Affairs, Center for Health and Wellbeing..
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