And while there are many interrelated and complex reasons for this, Benjamin Friedrich, associate professor of strategy at Kellogg, wanted to investigate the role of “marital sorting.” Or, more simply, how much is income inequality affected by who marries whom?
He and his colleagues drew on this question because they wondered whether previous studies had underestimated the magnitude of inequality caused by marriage-market matching.
Most previous studies have looked at marital classification based on the degree level each person received, such as a high school diploma versus a bachelor’s degree. But one could imagine that the financial prospects of someone with a degree in business might be quite different from those of someone with a degree in art history, even though they have the same degree level.
“Sorting by level of education hides all this heterogeneity, all these differences in career aspirations,” explains Friedrich, who worked with Frederik Almar, Bastian Schultzand Vejlin rune of Aarhus University in Denmark, and Ana Reynoso
of the University of Michigan.
Thus, the team set out to create a new method of categorizing educational programs. They then examined whether using these different categories would yield new inferences about how marriage matching patterns are changing and whether they reinforce inequality between households.
Using detailed administrative data from Denmark from 1980 to 2018, the researchers focused on education ambition— which they defined as the starting salaries and salary growth trajectories associated with various training programs.
Categorizing individuals in this way reveals a clear pattern: Over the past forty years, couples have become more likely to self-select into marriages with partners in the same aspiration category. The researchers estimated that this trend can explain more than 40 percent of the rising inequality since 1980. In contrast, the classification trends appear unchanged over this period when the education level category is used.
“We needed to find the right categorization to see its impact – and once we do, we realize that the classification of marriage matters a lot for inequality,” says Friedrich.
Looking for ambition
The Danish data included more than three million people a 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 group the more than 1,800 education programs in Denmark into four groups of different aspiration levels, which was determined based on the starting salaries and salary growth trajectories these programs tend to deliver.
Programs in the most ambitious group included some advanced degree programs (such as law, business, and medicine) as well as bachelor’s degrees in business. The bottom tier included architecture programs as well as professional degrees for nurses and carpenters, where starting salaries tend to be higher than average but are not as likely to increase at the rate of those in the top group. The third highest category included an eclectic mix of programs—degrees from high schools specializing in business as well as professional training programs for office clerks and bank advisors. These programs have below average starting salaries and relatively high salary growth. The lowest aspirations category grouped together programs that yield the lowest starting wages and salary growth—such as those that prepare Danes for public sector management jobs.
With this new categorization framework, the researchers found that self-sorting into like-minded couples increased by about 25 percent between 1980 and 2018.
They also noted additional patterns that contribute to increasing inequality: within-group marriage is more prevalent among types with higher aspirations—and the share of people earning these degrees has increased over the time period studied. This is partly due to the entry of women into the workforce since 1980 and, in particular, their entry into the ranks of those in the highest aspiration category, which makes the concept of high-earning “power couples” much more widespread.
Additionally, those with higher-level degrees earn more than they did four decades ago, and that percentage has grown faster than in the other three groups. This trend alone explains some of the widening economic inequality in society – and the intensification of marriage classification produces a doubling effect.
“If the economic returns of going to college have changed relative to going to high school, then marital sorting has become increasingly important,” Friedrich says. “The gap widens between the two couples who either met in high school or met in higher education.
After identifying the level of marriage classification using these more nuanced categories for education, the researchers wanted to quantify how much it affected inequality overall. So they created a contrarian: they held the 1980 marriage matching rates constant over their forty-year study period and then recalculated inequality. “If we hadn’t seen this increase in sorting, what would the opposite increase in inequality look like?” Friedrich explains.
The answer—that marriage patterns account for 40 percent of rising inequality—struck Friedrich as noteworthy and worthy of future exploration.
Revisiting the drivers of inequality
“There are many implications of these findings,” says Friedrich. For example, take the issue of intergenerational wealth transfers. Previous research has looked at how parents’ educational attainment affects children’s financial outcomes, “but now we’re looking at a different type of sorting—and that can have a much bigger impact on the transmission of wealth.”
Although the type of data the Danish researchers used is not available in the same form for the US population, Friedrich and his colleagues explain in the paper that the new categorization of education could work alongside survey data. , for example, to perform similar analyses.
For their part, Friedrich and his colleagues are already working on a follow-up project that examines how, once matched, couples decide who focuses on earning money and who does more work within the household. As Friedrich explains, these kinds of trade-offs can also lead to economic inequality.
“Couples with two very steep career paths generate enough income to afford necessary childcare and other marketable products they can use to support their careers,” she 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 reduces total household income’.