The Role of Evolving Marital Preferences in Growing Income Inequality

Abstract

In this paper, we describe mating patterns in the United States from 1962 to 2015 using CPS data (IPUMS). To measure the degree of assortativeness on the marriage market, we rely on the recent literature on multidimensional matching with continuous observable traits in order to disentangle marital preferences and demographic effects effectively. By estimating their model for each wave of the survey, we keep track of the evolution of marital preferences over time. In this way, we can answer our first question: has assortativeness increased over time? In line with the majority of past works, we find that the strength of sorting on education has increased. We also find that the strength of sorting on age has decreased, whereas the taste for ethnic homogamy has increased. The results on hourly wages and working hours, instead, may suggest that household specialization has become less and less relevant. Subsequently, we conduct a counterfactual analysis of between-household income inequality operating on the preference parameters of the matching model. We answer the following questions: how would people marry in 2015 if their preferences were the same as in 1971? To which extent the shifts in marital preferences can explain inequality trends? If people sorted on the marriage market as they did in 1971, the 2015 Gini coefficient would be lower by 6%, which implies that about 20% of the increase in the Gini coefficient is due to changes in marital preferences.