Working Paper: CEPR ID: DP17148
Authors: Luigi Guiso; Luigi Pistaferri; Andreas Fagereng
Abstract: We use population data on capital income and wealth holdings for Norway to measureasset positions and wealth returns before individuals marry and after the household isformed. These data allow us to establish a number of novel facts. First, individuals sorton personal wealth rather than parents’ wealth. Assortative mating on own wealthdominates, and in fact renders assortative mating on parental wealth statisticallyinsignificant. Second, people match also on their personal returns to wealth andassortative mating on returns is as strong as that on wealth. Third, post-marriagereturns on family wealth are largely explained by the return of the spouse with thehighest pre-marriage return. This suggests that family wealth is largely managed bythe spouse with the highest potential to grow it. This is particularly true for householdsat the top of the wealth distribution at marriage. We use a simple analytical example toillustrate how assortative mating on wealth and returns and wealth management taskallocation between spouses affect wealth inequality.
Keywords: wealth inequality; returns to wealth; assortative mating
JEL Codes: E13; E21; E24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| premarital wealth (D14) | marital choices (J12) |
| assortative mating on personal wealth (D31) | wealth inequality (D31) |
| assortative mating on returns (G11) | wealth accumulation post-marriage (D14) |
| premarital returns (J12) | post-marriage wealth management (D14) |
| spouse with highest premarriage return (J12) | post-marriage returns on family wealth (J12) |