Working Paper: NBER ID: w29903
Authors: Andreas Fagereng; Luigi Guiso; Luigi Pistaferri
Abstract: We use population data on capital income and wealth holdings for Norway to measure asset positions and wealth returns before individuals marry and after the household is formed. These data allow us to establish a number of novel facts. First, individuals sort on personal wealth rather than parents' wealth. Assortative mating on own wealth dominates, and in fact renders assortative mating on parental wealth statistically insignificant. Second, people match also on their personal returns to wealth and assortative mating on returns is as strong as that on wealth. Third, post-marriage returns on family wealth are largely explained by the return of the spouse with the highest pre-marriage return. This suggests that family wealth is largely managed by the spouse with the highest potential to grow it. This is particularly true for households at the top of the wealth distribution at marriage. We use a simple analytical example to illustrate how assortative mating on wealth and returns and wealth management task allocation between spouses affect wealth inequality.
Keywords: assortative mating; wealth inequality; returns to wealth
JEL Codes: E21; E24; J12
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| assortative mating on personal wealth (D31) | wealth inequality (D31) |
| assortative mating on personal returns to wealth (D31) | wealth inequality (D31) |
| premarriage returns (J12) | postmarriage wealth management (D14) |
| spouse with highest premarriage return (J12) | postmarriage returns on family wealth (J12) |