Saturday, July 25, 2020

As more people choose to marry someone with a similar income, inequality increases

See Rich Like Me: How Assortative Mating Is Driving Income Inequality by Branko Milanovic. Excerpts:

"Recent research has documented a clear increase in the prevalence of homogamy, or assortative mating (people of the same or similar education status and income level marrying each other). A study based on a literature review combined with decennial data from the American Community Survey showed that the association between partners’ level of education was close to zero in 1970; in every other decade through 2010, the coefficient was positive, and it kept on rising. A different database provides another perspective on this trend; it looks at marriage statistics for American women and men who married when they were “young,” that is, between the ages of twenty and thirty-five. In 1970, only 13 percent of young American men who were in the top decile of male earners married young women who were in the top decile of female earners. By 2017, that figure had risen to almost 29 percent.

At the same time, the top decile of young male earners have been much less likely to marry young women who are in the bottom decile of female earners. The rate has declined steadily from 13.4 percent to under 11 percent. In other words, high-earning young American men who in the 1970s were just as likely to marry high-earning as low-earning young women now display an almost three-to- one preference in favor of high-earning women. An even more dramatic change happened for women: the percentage of young high-earning women marrying young high-earning men increased from just under 13 percent to 26.4 percent, while the percentage of rich young women marrying poor young men halved. From having no preference between rich and poor men in the 1970s, women currently prefer rich men by a ratio of almost five to one.

In a very ambitious 2017 paper, Pierre-André Chiappori, Bernard Salanié and Yoram Weisstried tried to explain both the rise of assortative mating and the increasing level of education among women (which contrasts with a lack of increase in educational attainment for men). They argued that highly educated women have better marriage prospects, and thus, there is a “marriage education premium,” which is perhaps as important as the usual skill premium that education provides. While the skill premium is, in principle, gender neutral, the marriage education premium is, the authors argue, much higher for women. Underlying this must be greater “pure preference” for homogamy among men because if that did not exist, the rising education level of women might be as much of a deterrence in the marriage market as an attraction.

There is a further link between, on the one hand, assortative mating, and, on the other hand, increasing returns to investment in children, which only more educated couples are able to provide. They can, for example, expose their children to a learning-conducive atmosphere at home and introduce them to cultural experiences that less-educated parents may have little interest in (concerts, libraries, ballet), as well as to elite sports. The importance of linking these seemingly unrelated developments—women’s education, greater work participation by women, assortative marriage patterns, and the increasing importance of early childhood learning—is that it illuminates one of the key mechanisms of within-generation creation of inequality and its intergenerational transmission. If educated, highly skilled, and affluent people tend to marry each other, that by itself will tend to increase inequality. About one-third of the inequality increase in the United States between 1967 and 2007 can be explained by assortative mating, according to research by Koen Decancq, Andreas Peichl and Philippe Van Kerm. For countries in the OECD (Organization for Economic Cooperation and Development), assortative mating accounted for an average of 11 percent of increased inequality between the early 1980s and early 2000s.

But if, in addition, the returns to children’s early education and learning are sharply rising, and if these early advantages can be provided only by very educated parents, who, as the data show, spend much more time with their children than less educated parents, then the road to a strong intergenerational transmission of advantages and inequality is wide open. "

Related post:

The preference for partners of the same education has significantly increased for white individuals

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