Authors: Lasse Eika, Magne Mogstad, and Basit Zafar
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The New York Innovation Center bridges the worlds of finance, technology, and innovation and generates insights into high-value central bank-related opportunities.
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Staff Reports
Educational Assortative Mating and Household Income Inequality
August 2014 Number 682
Revised March 2017
Revised March 2017
JEL classification: D31, I24, J12
We document the degree of educational assortative mating, how it evolves over time, and the extent to which it differs between countries. Our analysis focuses on the United States but also uses data from Denmark, Germany, the United Kingdom, and Norway. We find evidence of positive assortative mating at all levels of education in each country. However, the time trends vary by the level of education: Among college graduates, assortative mating has been declining over time, whereas individuals with a low level of education are increasingly sorting into internally homogeneous marriages. These findings motivate and guide a decomposition analysis, where we quantify the contribution of various factors to the distribution of household income. We find that educational assortative mating accounts for a non-negligible part of the cross-sectional inequality in household income in each country. However, changes in assortative mating over time barely move the time trends in household income inequality. This is because the inequality contribution from the increase in assortative mating among those with lower levels of education is offset by the equalizing effect from the decline in assortative mating among the highly educated. By comparison, increases over time in the returns to education generate a considerable rise in household income inequality, but these price effects are partly mitigated by increases in college attendance and completion rates among women.
66 pages / 708 kbTools
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