Marry Your Like: Assortative Mating and Income Inequality  with Jeremy Greenwood, Georgi Kocharkov and Cezar Santos, January 2014, forthcoming American Economic Review Papers and Proceedings

 

Has there been an increase in positive assortative mating? Does assortative mating contribute to household income inequality? Data from the United States Census Bureau suggests there has been a rise in assortative mating. Additionally, assortative mating affects household income inequality. In particular, if matching in 2005 between husbands and wives had been random, instead of the pattern observed in the data, then the Gini coefficient would have fallen from the observed 0.43 to 0.34, so that income inequality would be smaller. Thus, assortative mating is important for income inequality. The high level of married female labor-force participation in 2005 is important for this result.

 

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Gender Gap in Spain: Policies and Outcomes over the Last Three Decades, with Ezgi Kaya and Virginia Sanchez-Marcos, January 2014, forthcoming SERIEs (the Journal of Spanish Economic Association)

 

We document recent trends in gender equality in employment and wages in Spain. Despite an impressive decline in the gender gap in employment, females are still less likely to work than males: about 76% of working age males and 63% of working age females were employed in 2010. If females work they are more likely to be employed part time and with temporary contracts. The large increase in female employment, from 28% in 1977 to 63% in 2010, was accompanied by a significant decline in fertility. The gender gap in wages, after controlling for worker and job characteristics as well as for selection, is high. It was about 20% in 2010, quite close to its value in 1994. Furthermore, the gender gap in wages is driven mainly by differences in returns to individual characteristics. While women are more qualified than men in observable labor market characteristics, they end up earning less. There have been several important policy changes that try to help families reconcile family responsibilities with market work. The existing literature suggests that households do react to incentives generated by different policies and policy changes are at least partly responsible for changes in female labor supply. In recent decades, the large inflow of immigrants, who provided relatively cheap household services, allowed more educated women to enter the labor market. Policy challenges, however, remain.

 


Income Taxation of U.S. Households: Facts and Parametric Estimates, with Remzi Kaygusuz and Gustavo Ventura, December 2013, forthcoming Review of Economic Dynamics

 

We use micro data from the U.S. Internal Revenue Service to document how Federal Income tax liabilities vary with income, marital status and the number of dependents. We report facts on the distributions of average taxes, properties of the joint distributions of taxes paid and income, and discuss how taxes are affected by marital status and the number of children. We also provide multiple parametric estimates of tax functions for use in applied work in macroeconomics and public finance.

 

Read VOX column on Income Taxation of US Households: Facts and Parametric Estimates

 


 

Childcare Subsidies and Household Labor Supply  with Remzi Kaygusuz and Gustavo Ventura, November 2013

 

What would be the aggregate effects of adopting a more generous and universal childcare subsidy program in the U.S.? We answer this question in a life-cycle equilibrium model with heterogeneous married and single households with three key features: (i) joint labor-supply of married households along extensive and intensive margins; (ii) heterogeneity in terms of the presence of children across households; (iii) skill losses of females associated to non participation. We find that subsidies have substantial effects on female labor supply and lead to a large reallocation of hours worked from males to females. Fully subsidized childcare available to all households leads to long-run increases in the participation of married females and total hours worked by about 10.1% and 1.0%, respectively, and to a decline of male hours by 1.5%. There are large differences across households in welfare gains, as a small number of households –poorer households with children – gain significantly while others lose. Welfare gains of newborn households amount to 1.9%.


 

Firm Dynamics, Job Turnover, and Wage Distributions in an Open Economy, with Kerem Cosar and James Tybout, October 2013 (Revised version).

 

This paper explores the combined effects of reductions in trade frictions, tariffs, and firing costs on firm dynamics, job turnover, and wage distributions. It uses establishment-level data from Colombia to estimate an open economy dynamic model that links trade to job flows in a new way. The fitted model captures key features of Colombian firm dynamics and labor market outcomes, as well changes in these features during the past 25 years. Counterfactual experiments imply that integration with global product markets has increased both average income and job turnover in Colombia. In contrast, the experiments find little role for this country's labor market reforms in driving these variables. The results speak more generally to the effects of globalization on labor markets in Latin America and elsewhere.

 


Does Marriage Make You Healthier?  with Yuliya Kulikova and Joan Llull, July 2013, VERY PRELIMINARY

 

Using data from the Medical Expenditure Panel Survey (MEPS) and the Panel Study of Income Dynamics (PSID) we study the relation between marriage and health. Our results show that in both data sets married agents are healthier than unmarried ones, and the health gap between married and unmarried agents widens by age. A gap of 9% points for ages 50-60 persists even after controlling for observables (education, income, health expenditure and health insurance status) and is much more significant for poorer individuals. When we control for individual fixed effects, the effect of marriage on health disappears for younger (20-40) ages, while a 3 percentage points difference, about 1/3 of the total, between married and unmarried individuals remains for older (50-60) ages. These results indicate that association between marriage and health is mainly driven by selection for younger ages, while there might be a positive protective effect of marriage that shows up at older ages.  We explore different mechanisms that might generate the health gap between married and unmarried individuals. Finally, our results show that being in good health is associated with higher labor income, although most of the effect comes from long term health as opposed to (short run) health shocks.

 


Technology and the Changing Family, Jeremy Greenwood, Georgi Kocharkov and Cezar Santos, June 2012.

Marriage has declined since 1960, with the drop being bigger for non-college educated individuals versus college educated ones. Divorce has increased, more so for the non-college educated vis-à-vis the college educated. Additionally, assortative mating has risen; i.e., people are more likely to marry someone of the same educational level today than in the past. A unified model of marriage, divorce, educational attainment and married female labor-force participation is developed and estimated to fit the postwar U.S. data. The role of technological progress in the household sector and shifts in the wage structure for explaining these facts is gauged.


Marital Instability and the Distribution of Wealth, with John Knowles, manuscript, July 2007.

The levels of wealth differ significantly among people who are approaching their retirement both by current marital status as well as by marital histories. We develop an equilibrium model of marriage and divorce and household savings, in which the interplay between endogenous formation and dissolution of families and savings decisions plays a key role. We show that a calibrated version of the model can reproduce observed patterns of wealth inequality by marital status and marital history, and highlight the role of endogenous marriage formation in wealth accumulation.


An Economic Analysis of Family Structure: Inheritance Rules and Marriage Systems, manuscript (first version November 1998). Updated version coming soon.

Traditional societies had norms governing the choice of mates and rules for determining inheritances. The goal here is to analyze how different inheritance rules and marriage systems are determined. To do this, an overlapping generations model of an agrarian economy is constructed. On the one hand, a young adult’s prospects on the marriage market depend upon the inheritance he or she will receive from their parents. The size of the inheritance is a function of who the children marry. On the other hand, parents depend upon their children to support them in old age. In the analysis, the size of inheritance and the level of old age support are determined as a result of a multilateral bargaining process between parents and their children. Assortative mating, patrilineal inheritance rules and polygamy emerge naturally out of the model.