Marital Sorting and Parental Wealth

Kerwin Kofi Charles, Erik Hurst, Alexandra Killewald

NBER Working Paper No. 16748
Issued in January 2011
NBER Program(s):   AG   EFG   LS   PE

Using data from the Panel Study of Income Dynamics (PSID), this paper studies the degree to which spouses sort in the marriage market on the basis of parental wealth. We estimate a variety of models, including transition matrices, OLS and TSLS models to deal with measurement error in wealth reports. Our various results show that men and women in the U.S. marry spouses whose parents have wealth similar to that of their own parents; and are very unlikely to marry persons from very different parental wealth backgrounds. This effect is present in the population as a whole, within racial groups, and especially in the tails of the distribution. Our preferred estimates indicate that the correlation in log wealth between own and spouse's parents wealth is around 0.4. We show that education accounts for only one-quarter of this sorting, and also show that selection into and out marriage by parental wealth does not appreciably bias our results.

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Document Object Identifier (DOI): 10.3386/w16748

Published: Demography February 2013, Volume 50, Issue 1, pp 51-70 Marital Sorting and Parental Wealth Kerwin Kofi Charles, Erik Hurst, Alexandra Killewald

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