Sunday, June 21, 2015

How whom we marry affects income inequality

By James Pethokoukis of AEI.

"A recent Economist issue highlighted the role of assortative marrying in the US inequality story. From its review of “Inequality: What Can Be Done” by Anthony Atkinson:
In America, for instance, incomes at the top of the scale began pulling away from the rest quite soon after 1945. Yet household inequality—taking account of taxes and transfers—did not rise until what Mr Atkinson calls the “Inequality Turn” around 1980. Several factors contributed to this, including changes for women and work. After the second world war, when female labour-force participation grew rapidly, high-earning men tended to marry low-earning women; the rising numbers of working women reduced household inequality. From the 1980s on, by contrast, men and women tended to marry those who earned like themselves—rich paired with rich; rising female participation in the workforce exacerbated inequality.
Bosses are now more likely to marry other executives rather than secretaries. The 2014 study “Marry Your Like: Assortative Mating and Income Inequality” found that if marriage matching today were the same as in 1960, income inequality would be less. A 2006 New York Times article explored reasons behind the trend:
For one thing, more couples are meeting in college and other educational settings, where prospective mates come prescreened by admissions committees as discerning as any yenta. … Secondly, men and women have become more alike in what they want from a marriage partner. This convergence is both cultural — co-ed gyms and bars have replaced single-sex sewing circles and Elks clubs — and economic. Just as women have long sought to marry a good breadwinner, men, too, now find earning potential sexy. “There are fewer Cinderella marriages these days,” says Stephanie Coontz, author of “Marriage, a History.” “Men are less interested in rescuing a woman from poverty. They want to find someone who will pull her weight.”  …  And finally, there’s what Schwartz calls the growing “social and economic distance” between the well educated and the less so, a gulf even ardent romantics may find difficult to bridge.
Additionally, the late Gary Becker looked at how assortative mating affects the correlation between incomes and SAT scores:
The combination of assortative mating with higher returns to IQ could have dramatic effects on relative mobility if the effect was to insulate to a significant degree a prosperous family’s children from economic risk. And it may be. The adults in high-IQ families are disproportionately represented in the jobs (professional, managerial, financial, and so forth) that pay well, and their income can and often is used to give their children a boost—for example in the form of payment of tuition to high-quality (and very expensive) private schools, payment to tutors, a variety of other educational enrichments, and entry into high-quality colleges without need for their children to borrow to finance college (or graduate or professional school) and thus assume debt.
Colleges like to admit kids from high-income families, seeing such kids as future donors. And high-IQ parents are likely to produce high-IQ children, further enhancing the children’s attractiveness to first-rate colleges. These factors, which loom larger the greater the inequality in the income distribution, because that inequality creates a highly affluent tier of families (a proximed by the income shares of the top 10 percent and within that group the top 1 percent) are likely to reduce relative mobility, by securing a disproportionate number of the top college and university admissions and top jobs for children of the intellectual-economic elite."

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