Assortative Mating and Income Inequality
...the tendency for increased stratification has contributed to greater inequality...
Assortative mating is the process by which people of similar backgrounds, such as educational attainment or financial means, select a partner. Over the past half-century, there has been an increase in positive assortative mating within the marriage market. In Marry Your Like: Assortative Mating and Income Inequality (NBER Working Paper No. 1982), authors Jeremy Greenwood, Nezih Guner, Georgi Kocharkov, and Cezar Santos document this pattern and consider how it has affected income inequality across households.
To study this question, the researchers employ a large dataset of hundreds of thousands of households from the U.S. Census Bureau for the period 1960 to 2005. They find that more formally educated people are increasingly likely to marry those with similar educational attainment. Those with less formal education are also increasingly likely to marry those with lower education levels. Since household income is strongly correlated with the partners' level of formal education, the tendency for increased stratification has contributed to greater inequality over the study period. This pattern has been compounded by growing disparities in the earnings of those with high and low levels of education.
The authors illustrate this with some examples. In 1960, if a woman with a less-than-high-school education married a similarly educated man, their family income, based on the average of individual incomes for those with their education levels, would have been 77 percent of the national mean household income. This number dropped to 41 percent in 2005, a fall of 36 percentage points. Likewise, the income for a married couple consisting of two individuals with a high school education, relative to national mean household income, fell by 20 percentage points from 1960 to 2005, from 103 to 83 percent. At the opposite end of the spectrum, the relative income of a couple consisting of two college graduates rose by 7 percentage points, from 153 to 160 percent, over this period. The income of a married couple in which both partners had post-college education moved up from 176 percent of mean income to 219 percent.
In summary, the authors attribute the growth of household inequality to three interacting forces. The first is rising returns to education. Earnings across educational classes have become more polarized. The second factor is increased positive assortative mating. People with similar socioeconomic backgrounds tend increasingly to marry each other, exacerbating income inequality. Third, the increase in married female labor force participation has heightened inequality, and has also made women's earnings an increasingly important determinant of household income inequality.