Gonalons-Pons, Pilar, and Christine R. Schwartz
Working paper no. 2015-02
The growing economic resemblance of spouses has contributed to rising inequality by increasing the number of couples in which there are two high- or two low-earning partners. The dominant explanation for this trend is increased assortative mating. Previous research has primarily relied on cross-sectional data and thus has been unable to disentangle changes in assortative mating from changes in the division of spouses’ paid labor–a potentially key mechanism given the dramatic rise in wives’ labor supply. We use data from the Panel Study of Income Dynamics (PSID) to decompose the increase in the correlation between spouses’ earnings and its contribution to inequality between 1970 to 2013 into parts due to (a) changes in assortative mating and (b) changes in the division of paid labor. Contrary to what has often been assumed, the rise of economic homogamy and its contribution to inequality is largely attributable to changes in the division of paid labor, rather than changes in sorting on earnings or earnings potential. Our findings indicate that the rise of economic homogamy cannot be explained by hypotheses centered on meeting and matching opportunities and show where in this process inequality is generated and where it is not.