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Marital Sorting, Household Inequality and Selection

Author

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  • Fernández-Val, Iván

    (Boston University)

  • van Vuuren, Aico

    (University of Groningen)

  • Vella, Francis

    (Georgetown University)

Abstract

Using CPS data for 1976 to 2022 we explore how wage inequality has evolved for married couples with both spouses working full time full year, and its impact on household income inequality. We also investigate how marriage sorting patterns have changed over this period. To determine the factors driving income inequality we estimate a model explaining the joint distribution of wages which accounts for the spouses' employment decisions. We find that income inequality has increased for these households and increased assortative matching of wages has exacerbated the inequality resulting from individual wage growth. We find that positive sorting partially reflects the correlation across unobservables influencing both members' of the marriage wages. We decompose the changes in sorting patterns over the 47 years comprising our sample into structural, composition and selection effects and find that the increase in positive sorting primarily reflects the increased skill premia for both observed and unobserved characteristics.

Suggested Citation

  • Fernández-Val, Iván & van Vuuren, Aico & Vella, Francis, 2023. "Marital Sorting, Household Inequality and Selection," IZA Discussion Papers 16513, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp16513
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    References listed on IDEAS

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    1. Francine D. Blau & Lawrence M. Kahn & Nikolai Boboshko & Matthew Comey, 2024. "The Impact of Selection into the Labor Force on the Gender Wage Gap," Journal of Labor Economics, University of Chicago Press, vol. 42(4), pages 1093-1133.
    2. Pierre-André Chiappori & Monica Costa Dias & Costas Meghir, 2020. "Changes in Assortative Matching: Theory and Evidence for the US," NBER Working Papers 26932, National Bureau of Economic Research, Inc.
    3. Keane, Michael P, 1994. "A Computationally Practical Simulation Estimator for Panel Data," Econometrica, Econometric Society, vol. 62(1), pages 95-116, January.
    4. Masaaki Sibuya, 1959. "Bivariate extreme statistics, I," Annals of the Institute of Statistical Mathematics, Springer;The Institute of Statistical Mathematics, vol. 11(2), pages 195-210, June.
    5. Michael Kremer, 1997. "How Much does Sorting Increase Inequality?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(1), pages 115-139.
    6. Pierre-André Chiappori & Bernard Salanié & Yoram Weiss, 2017. "Partner Choice, Investment in Children, and the Marital College Premium," American Economic Review, American Economic Association, vol. 107(8), pages 2109-2167, August.
    7. Bram De Rock & Mariia Kovaleva & Tom Potoms, 2023. "A spouse and a house are all we need? Housing demand, labor supply and divorce over the lifecycle," IFS Working Papers W23/35, Institute for Fiscal Studies.
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    Cited by:

    1. Victor Chernozhukov & Iv'an Fern'andez-Val & Jonas Meier & Aico van Vuuren & Francis Vella, 2025. "Bivariate Distribution Regression; Theory, Estimation and an Application to Intergenerational Mobility," Papers 2508.12716, arXiv.org.

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    Keywords

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    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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