Marriage, Assortative Mating, and Wealth Inequality

Using Norwegian administrative registries that record wealth and capital income for the whole population — and, crucially, for each spouse before they marry — this paper documents that people sort at marriage not only on how much wealth they have but on the rate of return they earn on it, a form of assortative mating not previously documented. Measuring both variables four years before the marriage or first observed cohabitation with a common child, for couples formed between 2005 and 2014, the authors find a Spearman rank correlation of 0.19 for wealth and 0.18 for returns on assets, and a rank-rank regression slope of 0.2 for wealth that is far from uniform across the distribution: matching is if anything negative in the bottom quintile where net worth is negative, 0.31 above the 20th percentile, and 0.73 in the top decile. Once own wealth is controlled for, sorting on parental wealth — the only form earlier work could measure — drops by a factor of twenty and loses significance, so the authors conclude that “assortative mating on parental wealth emerges only because the latter tends to proxy for assortative mating on personal wealth.” Sorting on returns survives controls for demographics (elasticity 0.14), for 10,000 dummies for husband–wife wealth-percentile interactions (0.13), and for interactions of pre-marriage risky-asset shares, and the intergenerational elasticity of returns (0.017) is far smaller than that of wealth (0.10), which the authors read as suggesting “it is much easier for parents to transfer wealth than to transfer the ability to grow it faster.” Post-marriage household returns load 79% on the higher-earning spouse’s pre-marriage return and 21% on the lower, but men receive more weight than their returns warrant, and among couples where both spouses come from the top wealth decile the low-return spouse’s weight falls to zero — a pattern the paper offers as one micro-foundation for the documented scale dependence of returns to wealth, and hence for wealth concentration at the top.

Andreas Fagereng | Macro Paper Warehouse

Marriage, Assortative Mating, and Wealth Inequality