Working Paper: NBER ID: w16748
Authors: Kerwin Kofi Charles; Erik Hurst; Alexandra Killewald
Abstract: Using data from the Panel Study of Income Dynamics (PSID), this paper studies the degree to which spouses sort in the marriage market on the basis of parental wealth. We estimate a variety of models, including transition matrices, OLS and TSLS models to deal with measurement error in wealth reports. Our various results show that men and women in the U.S. marry spouses whose parents have wealth similar to that of their own parents; and are very unlikely to marry persons from very different parental wealth backgrounds. This effect is present in the population as a whole, within racial groups, and especially in the tails of the distribution. Our preferred estimates indicate that the correlation in log wealth between own and spouse's parents wealth is around 0.4. We show that education accounts for only one-quarter of this sorting, and also show that selection into and out marriage by parental wealth does not appreciably bias our results.
Keywords: Marital Sorting; Parental Wealth; Socioeconomic Status
JEL Codes: J12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Parental wealth (G51) | Sorting of spouses (J12) |
| Educational attainment (I21) | Sorting of spouses (J12) |
| Parental wealth (G51) | Probability of marriage entry (J12) |
| Parental wealth (G51) | Likelihood of divorce (J12) |
| Wealth of in-laws (G51) | Likelihood of divorce (J12) |