How Marriages Are Exacerbating Income Inequality
Skip to content
Economics Apr 1, 2023

How Marriages Are Exacerbating Income Inequality

Marriage patterns can account for 40 percent of rising inequality, according to a new study.

business power couple atop wedding cake

Yevgenia Nayberg

Based on the research of

Almar Frederik

Benjamin Friedrich

Ana Reynoso

Bastian Schulz

Rune Vejlin

The income gap between richer and poorer households has expanded steadily over the past 40 years in nearly every region of the world.

And while there are many intertwined and complicated reasons for this, Benjamin Friedrich, an associate professor of strategy at Kellogg, wanted to explore the role of “marital sorting.” Or, more simply put, how much is income inequality affected by who marries whom?

He and his coauthors were drawn to this question because they wondered if previous studies were underestimating the amount of inequality that was caused by marriage-market matching.

Most prior studies looked at marital sorting by the degree level each person obtained, such as a high-school degree versus a bachelor’s degree. But one could imagine that the financial prospects of someone with a bachelor’s degree in business might be quite different than those of someone with a bachelor’s degree in art history, even though they have the same level of degree.

“The educational-level sorting hides all of this heterogeneity, all of these differences in career ambition,” explains Friedrich, who teamed up with Frederik Almar, Bastian Schulz, and Rune Vejlin of Aarhus University in Denmark, and Ana Reynoso
of the University of Michigan.

So the team set out to create a new method of categorizing educational programs. Then they examined whether using these different categories would yield new conclusions about how marriage-matching patterns are changing and if they’re amplifying inequality between households.

Using detailed administrative data from Denmark from 1980 to 2018, the researchers focused on educational ambition—which they defined as the starting wages and wage-growth trajectories associated with various educational programs.

Categorizing individuals this way unearths a clear pattern: over the past forty years, couples have become more likely to self-select into marriages with partners in the same ambition category. The researchers estimated that this trend can explain more than 40 percent of increasing inequality since 1980. In contrast, the sorting trends appear unchanged over this period when the education-level category is used.

“We needed to find the right categorization in order to see its impact—and once we do, we realize that marriage sorting matters for inequality quite a bit,” Friedrich says.

Seeking ambition

The Danish data included more than three million individuals per year, on average, and allowed the researchers to track the education, labor market, and income histories of heterosexual couples.

They used a machine-learning technique to cluster the more than 1,800 education programs in Denmark into four groups of varying levels of ambition, which was defined based on the starting wages and wage growth trajectories these programs tend to yield.

“If the financial returns of going to college have changed relative to going to high school, then marital sorting is becoming more and more important.”

Benjamin Friedrich

Programs in the most-ambitious group included some higher-degree programs (like law, business, and medicine) as well as bachelor’s degrees in business. The level below included architecture programs as well as vocational degrees for nurses and carpenters, where starting wages tend to be higher than average, but aren’t as likely to grow at the rate of those in the top group. The third-highest category comprised an eclectic mix of programs—degrees from high schools that specialize in business as well as those from vocational programs training office clerks and bank advisors. These programs have below-average starting wages and relatively high wage growth. The lowest ambition category grouped programs that yield the lowest starting wages and wage growth—like those preparing Danes for administrative jobs in the public sector.

With this new categorization framework, the researchers established that self-sorting into equal-ambition couples increased by about 25 percent between 1980 and 2018.

They also noted additional patterns contributing to increased inequality: marrying within one’s own group is most prevalent among the highest-ambition types—and the share of individuals earning those degrees has increased over the study’s time period. That’s partially due to women’s entry into the workforce since 1980 and, in particular, their joining the ranks of those in the highest-ambition category, which makes the concept of high-earning “power couples” much more prevalent.

Additionally, those with higher-level degrees earn more than they did four decades ago, and that rate has increased faster than it did in the other three groups. That trend alone explains some of the widening economic inequality in society—and the intensification of marriage sorting produces a doubling-down effect.

“If the financial returns of going to college have changed relative to going to high school, then marital sorting is becoming more and more important,” Friedrich says. “The gap widens between the two couples who either met in high school or met in a higher-education level.”

After identifying the level of marriage sorting using these more nuanced categories for education, the researchers wanted to quantify how much it affected inequality overall. So they created a counterfactual: they held the 1980 marriage-matching rates steady across their forty-year study period and then recalculated inequality. “Had we not seen this increase in sorting, what would the counterfactual increase in inequality have looked like?” Friedrich explains.

The answer—that the marriage patterns account for 40 percent of rising inequality—struck Friedrich as remarkable and worthy of future exploration.

Reexamining the drivers of inequality

“There are many implications of these findings,” Friedrich says. For example, take the question of intergenerational transfers of wealth. Previous research has looked at how parents’ educational-degree attainment affects children’s economic outcomes, “but now we’re looking at a different type of classification—and that might have a much bigger impact on the transmission of wealth.”

Though the type of data the researchers used from Denmark isn’t available in the same form for the U.S. population, Friedrich and his coauthors explain in the paper that their new education categorization could work in tandem with survey data, for example, to run similar analyses.

For their part, Friedrich and his coauthors are already working on a follow-up project that examines how, once they match, couples make determinations about who focuses on earning money and who does more work within the household. As Friedrich explains, these sorts of trade-offs can also drive economic inequality.

“Couples with two very steep career paths generate enough income to afford the necessary childcare and other market products that they can use to help support their careers,” he explains. “Others can’t, and in those types of households, we see potentially a lot more specialization [in terms of which spouse raises the kids and which earns money], which then lowers the overall household income.”

About the Writer

Katie Gilbert is a freelance writer in Philadelphia.

About the Research

Almar, Frederik, Benjamin Friedrich, Ana Reynoso, Bastian Schulz, and Rune Vejlin. 2023. “Marital Sorting and Inequality: How Educational Categorization Matters.” Working paper.

Read the original

Most Popular This Week
  1. How Are Black–White Biracial People Perceived in Terms of Race?
    Understanding the answer—and why black and white Americans may percieve biracial people differently—is increasingly important in a multiracial society.
    How are biracial people perceived in terms of race
  2. Don’t Wait to Be Asked: Lead
    A roadmap for increasing your influence at work.
    An employee leads by jumping from the bleachers and joining the action.
  3. How (Not) to Change Someone’s Mind
    Psychologists have found two persuasion tactics that work. But put them together and the magic is lost.
    A woman on a street talks through a large megaphone.
  4. Which Form of Government Is Best?
    Democracies may not outlast dictatorships, but they adapt better.
    Is democracy the best form of government?
  5. How Autocracies Unravel
    Over time, leaders grow more repressive and cling to yes-men—a cycle that’s playing out today in Putin’s Russia.
    autocrat leaning over battle map surrounded by yes-men.
  6. Knowing Your Boss’s Salary Can Make You Work Harder—or Slack Off
    Your level of motivation depends on whether you have a fair shot at getting promoted yourself.
    person climbin ladder with missing rungs toward rich boss surrounded by money bags on platform
  7. Sitting Near a High-Performer Can Make You Better at Your Job
    “Spillover” from certain coworkers can boost our productivity—or jeopardize our employment.
    The spillover effect in offices impacts workers in close physical proximity.
  8. It’s Performance Review Time. Which Ranking System Is Best for Your Team?
    A look at the benefits and downsides of two different approaches.
    An employee builds a staircase for his boss.
  9. Will AI Eventually Replace Doctors?
    Maybe not entirely. But the doctor–patient relationship is likely to change dramatically.
    doctors offices in small nodules
  10. Why Do Some People Succeed after Failing, While Others Continue to Flounder?
    A new study dispels some of the mystery behind success after failure.
    Scientists build a staircase from paper
  11. Four Strategies for Cultivating Strong Leaders Internally
    A retired brigadier general explains how companies can prioritize talent development.
    Companies should adopt intentional leadership strategies since developing leaders internally is critical to success.
  12. Take 5: Not So Fast!
    A little patience can lead to better ideas, stronger organizations, and more-ethical conduct at work.
  13. Too Much Cross Talk. Too Little Creativity. How to Fix the Worst Parts of a Virtual Meeting.
    Six tools from an unlikely place—improv comedy—to use on your next Zoom call.
    meeting participants improv
  14. Take 5: How to Be Prepared for Important Career Moments
    Expert advice on getting ready to network, negotiate, or make your case to the CEO.
    How to be prepared
  15. Entrepreneurship Through Acquisition Is Still Entrepreneurship
    ETA is one of the fastest-growing paths to entrepreneurship. Here's how to think about it.
    An entrepreneur strides toward a business for sale.
  16. Why Do Long Wars Happen?
    War is a highly inefficient way of dividing contested resources—yet conflicts endure when there are powerful incentives to feign strength.
    long line of soldiers marching single file through a field
  17. 5 Tips for Growing as a Leader without Burning Yourself Out
    A leadership coach and former CEO on how to take a holistic approach to your career.
    father picking up kids from school
  18. 2 Factors Will Determine How Much AI Transforms Our Economy
    They’ll also dictate how workers stand to fare.
    robot waiter serves couple in restaurant
  19. What Went Wrong at AIG?
    Unpacking the insurance giant's collapse during the 2008 financial crisis.
    What went wrong during the AIG financial crisis?
More in Business Insights Finance & Accounting