Organised by: Austrian Institute of Economic Research
Online since: 18.12.2019 0:00
Marriage is one of the most important determinants of economic prosperity, yet most existing theories of inequality ignore
the role of the family. This paper documents that the distributions of earnings and wealth are highly concentrated, even when
disaggregated into single and married households. At the same time, there is a large marriage gap: married people earn on
average 26 percent more income, and they hold 35 percent more net worth. To account for these facts, I develop a general equilibrium
model where females and males face uninsurable income risk and make decisions on consumption-savings, labour supply and marriage
formation. In a calibrated version of the model, I show that selection into marriage based on productive characteristics,
an effective tax bonus for married couples, and stronger bequest motives for households with descendants are key to accounting
for the marriage gap in earnings and wealth. A policy experiment of moving from joint tax filing for married couples to separate
filing yields output gains and more marital sorting.
The Euroframe group of research institutes (CASE, CPB, DIW, ESRI, ETLA, IfW, NIESR, OFCE, PROMETEIA, WIFO) will hold its 17th
annual Conference on Economic Policy Issues in the European Union in London on 5 June 2020. The aim of this conference is
to bring together academics and policy-oriented economists by providing a forum for debate on economic policy issues relevant
in the European context. The 17th Conference will focus on the challenges posed by climate change. Public opinion has changed
and European policy-makers, businesses and the financial sector have started to recognise the importance of climate change
and biodiversity on the lives of people and the economy. Climate action must stand at the core of long-term growth and infrastructure
planning. How do policy-makers ensure that the costs and benefits of climate action are shared equitably at a time when multilateral
frameworks have come under threat?
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