WIFO Research Seminar, Österreichisches Institut für Wirtschaftsforschung, Wien, 28.01.2020
Online seit: 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.
Forschungsbereich:Arbeitsmarktökonomie, Einkommen und soziale Sicherheit