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Testing Becker's Theory of Positive Assortative Matching

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  • Aloysius Siow

Abstract

In a static frictionless transferable utilities bilateral matching market with systematic and idiosyncratic payoffs, supermodularity of the match output function implies a strong form of positive assortative matching: The equilibrium matching distribution has all positive local log odd ratios or totally positive of order 2 (TP2). A strong form of a preference for own type implies supermodularity of the match output function. It has additional restrictions on local odds ratios. Local odds ratios are not informative on whether a bilateral matching market equilibrates with or without transfers. Using white married couples in their thirties from the US 2000 census, spousal educational matching obeyed TP2 except for less than 0.2% of marriages with extreme spousal educational disparities. Using the TP2 order, there were more positive assortative matching by couples living in SMSA's than those who do not; but not more positive assortative matching in 2000 than in 1970. There were increases in specific local log odds over that period.

Suggested Citation

  • Aloysius Siow, 2009. "Testing Becker's Theory of Positive Assortative Matching," Working Papers tecipa-356, University of Toronto, Department of Economics.
    • Handle: RePEc:tor:tecipa:tecipa-356
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    More about this item

    Keywords

    matching; marriage; education; local log odds; TP2; United States;
    All these keywords.

    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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