Thursday, May 1, 2014

ASSORTATIVE MATING AND INCOME INEQUALITY


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Assortative mating is the process by which people of similar backgrounds, such
as educational attainment or financial means, select a partner. Over the past
half-century, there has been an increase in positive assortative mating within
the marriage market. In Marry Your Like: Assortative Mating and Income Inequality (NBER Working Paper No. 19829), authors Jeremy Greenwood, Nezih
Guner, Georgi Kocharkov, and Cezar Santos document this pattern and consider how
it has affected income inequality across households.

To study this question, the researchers employ a large dataset of hundreds of
thousands of households from the U.S. Census Bureau for the period 1960 to 2005.
They find that more formally educated people are increasingly likely to marry
those with similar educational attainment. Those with less formal education are
also increasingly likely to marry those with lower education levels. Since
household income is strongly correlated with the partners' level of formal
education, the tendency for increased stratification has contributed to greater
inequality over the study period. This pattern has been compounded by growing
disparities in the earnings of those with high and low levels of education.

The authors illustrate this with some examples. In 1960, if a woman with a
less-than-high-school education married a similarly educated man, their family
income, based on the average of individual incomes for those with their
education levels, would have been 77 percent of the national mean household
income. This number dropped to 41 percent in 2005, a fall of 36 percentage
points. Likewise, the income for a married couple consisting of two individuals
with a high school education, relative to national mean household income, fell
by 20 percentage points from 1960 to 2005, from 103 to 83 percent. At the
opposite end of the spectrum, the relative income of a couple consisting of two
college graduates rose by 7 percentage points, from 153 to 160 percent, over
this period. The income of a married couple in which both partners had
post-college education moved up from 176 percent of mean income to 219 percent.

In summary, the authors attribute the growth of household inequality to three
interacting forces. The first is rising returns to education. Earnings across
educational classes have become more polarized. The second factor is increased
positive assortative mating. People with similar socioeconomic backgrounds tend
increasingly to marry each other, exacerbating income inequality. Third, the
increase in married female labor force participation has heightened inequality,
and has also made women's earnings an increasingly important determinant of
household income inequality.
--Les Picker

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