Who Bears the Pen? Relative Income and Gender Gap in Mortgage Signing Order

The major empirical challenge for estimating the driving force of the gender difference is theomitted variable bias because the proposed factor is usually intertwined with other observableand unobservable characteristics. This paper adopts a novel approach to tackle this identificationproblem and examines how the relative income defines gender roles in the context of mortgagesigning order. We first document that men sign first 89% of the time when a mixed-gendercouple applies for a housing loan. The signing order reflects purely behavioral preferences, asthere is no difference in the legal rights or obligations of either the first or second borrowers. Weshow that relative income is the major determinant of the observed gender gap in signing orderand we exclude other possible explanations such as discrimination, loan officer bias and socialnorms. To isolate relative income from differences in other dimensions, we compare the signingorder of the mixed- and same-gender couples and find that the effects of relative income not onlypersists but also are fairly comparable between the two groups. Finally, we provide consistentmacro-level evidences by both cross-sectional and dynamic analysis and show that gender gap insigning order is higher in states with larger gender wage gap and experiences a declining trendover time.