Marriage Dynamics, Earnings Dynamics, and Lifetime Family Income

We estimate a statistical model of individual earnings, marriage (with marital sorting), divorce, fertility, and nonlabor income. For the 1935-44, 1945-62, and 1964-74 birth cohorts, we use the model to measure the dynamic responses of earnings and family income to labor market shocks, changes in marital status, education differences and permanent wage differences. The model enables us to isolate the importance of effects operating through marriage probabilities and through spouse characteristics (sorting). We find that gender differences in the responses are large but have declined across cohorts. The decline reflects the increase in the labor supply and wage rates of married women as well as other changes. For each cohort, we also provide gender-specific estimates of the contribution of education, permanent wage, employment and hours heterogeneity, labor market shocks, spouse characteristics, spouse wage shocks, and marital histories to the variance of lifetime family income. For women, own characteristics have become increasingly important in the determination of lifetime family income, while spouse characteristics have become less important. The opposite is true for men. Gender differences in the sources of inequality in lifetime family income have narrowed.