Publication: Love and Money: A Theoretical and Empirical Analysis of Household Sorting and Inequality
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2001
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Abstract
This Paper examines the interactions between household matching, inequality, and per capita income. We develop a model in which agents decide whether to become skilled or unskilled, form households, consume and have
children. We show that the equilibrium sorting of spouses by skill type (their
correlation in education) is increasing as a function of the skill premium. In the
absence of perfect capital markets, the economy can converge to different
steady states, depending upon initial conditions. The degree of marital sorting,
wage inequality, and fertility differentials are positively correlated across
steady states and negatively correlated with per capita income. We use household surveys from 34 countries to construct several measures of the skill premium and of the degree of correlation of spouses’ education (marital sorting). For all our measures, we find a positive and significant relationship
between the two variables.
Description
Working paper publicado por National Bureau of Economic Research. 2001,nº 8580 NBER y UCLA Departamento de Economía
Keywords
assortative matching, education, fertility, growth and human capitla