How the New Model of Marriage May Drive Income Inequality

(Photo: Boston Public Library)

(Photo: Boston Public Library)

Our last two podcasts, “Why Marry?” (Part 1 and Part 2) explored the broad and deep changes in the institution of marriage. One theme was that the old marriage model of “production complementaries” has shifted to one based on “consumption complementarities.” Here’s Justin Wolfers on the subject:

We have more time, more money, and so you want to spend it with someone that you’ll enjoy. So, similar interests and passions. We call this the model of hedonic marriage. But really it’s a lot more familiar than that. This is just economists giving a jargon name to love. So you want someone who’s actually remarkably similar to you or has similar passions that you do. So it fundamentally changes who marries who.

But is this change also related to income inequality? Wolfers briefly referenced that idea a few years back; in a recent article for Vox, the economics Jeremy Greenwood, Nezih Guner, Georgi Kocharkov, and Cezar Santos further the argument:

Think about the following simple thought experiment. Suppose that there are only two types of people, equal in numbers, those that went to college and those who did not. Those who went to school earn $30 and those who did not earn $10. If educated men marry uneducated women and uneducated men marry educated women, then every household will earn $40 in total. So, household income is perfectly equalised. Now, imagine a world in which educated people only marry other educated people. Then, a household made up of an educated man and an educated woman will earn $60 versus the $20 earned by a household that consists of only uneducated spouses. The households at the top of the distribution would have three times the income of those at the bottom.

Obviously, the example above is a dramatic simplification of reality, but it does capture an important trend that is actually taking place in the U.S. economy. To study its impact, we track samples of hundreds of thousands of households from the U.S. Census Bureau for the period 1960 to 2005 (see Greenwood, Guner, Kocharkov and Santos 2014). The upshot of the analysis is that rising assortative mating together with increasing labour-force participation by married women are important in order to account for the determinants of growth in household income inequality in the U.S.

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  1. steve cebalt says:

    The point about the trend in household income disparity as a result of two-career couples is well made in this post, as far as that point takes us, but…consider that most married people have children.

    Measuring household income — mere dollars — is a poor barometer for this comparison of the two models of marriage being discussed. Quality of life measurements must go beyond the Adjusted Gross Income on line 37 of the IRS 1040.

    I am not convinced that the income inequality is so significant; poorer one-income couples who enjoy greater production complementaries (as opposed to the consumption capacity of two incomes) may be wealthier in the meaningful joys of daily domestic family living, if not in dollars. The work of the stay-at-home spouse adds value for the entire family — and this discussion has glossed over the value added to the children by the “old” model. Further, an uneducated but intelligent nonworking spouse can very much match the intellect and so-called hedonic passions of an educated one; to think otherwise is a false and patronizing premise.

    The point: A couple’s worth and wealth is not limited nor defined by a line on the tax return. It is defined by their quality of life, for the couple, and for their children. A proper comparison must take that profound added value into account.

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  2. Extinct Species says:

    Seems highly unlikely it would explain the dramatic rise in relative incomes of the top .01 percent or even the top one percent.

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  3. johnny says:

    You guys are making this WAY too complicated. This has come down to divorce laws that require alimony for the less advantaged spouse. Men and women understand that with the divorce rate that there is a high likelihood of marital support if there is a significant income gap between spouses. Therefore, if you marry a similar income spouse then alimony get much less likely.

    It just ain’t that hard.

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  4. Dana Wilk says:

    Awesome piece: I would love to hear more about the subject of the growing emergence of single mothers of young children. I am curious to understand more about the support that could be provided (and is currently practically non-existent) via social systems to provide adequate support to young children and mothers. What was unclear to me is whether or not there is a parenting presence in those numbers sited and the end of part 2 aside from the single mothers themselves —- who also participates in raising a child when a child is raised by a single parent? Fathers outside of the household, partners, aunts, uncles, grandparents, friends? And what the impact of social inequities is on both the parent and the child in the stage of early childhood. If many people marry to support the raising of children, and yet the task of raising a child is so demanding that it often breaks the homeostasis of a hedonic model of marriage by the shear magnitude of the task falling on just one or two people, why do we as a culture continue to place the brunt of parenting on the nuclear family or on one single individual? What are alternative models for raising children and supporting families and single mothers in our current economic system?

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