We analyze the association between spouses’ earnings taking account of non-linearities along both spouses’ distribution of earnings. We also document the non-linearity of the relationships between earnings and labor force participation, earnings and couple formation, and earnings and number of children. Using simulations, we then analyze how changes in spouses’ rank-dependence structure, labor force participation and couple formation contribute to the upsurge in inequality in the U.S between 1967 and 2018. We find that an increased tendency towards positive sorting contributed substantially to the rise in inequality only among dual-earner couples, while it contributed little to overall inequality across households. Temporal and distributional heterogeneity are important, as earnings association had a more substantial role in the bottom of the earnings distribution and in recent years. The decline in couple formation contributed substantially to the rise in inequality, while the increase in female labor force participation and the fertility decline had equalizing effects.
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The datasets generated and analysed during the current study are publicly available online at //cps.ipums.org/cps/index.shtml. The guide and code to replicate the results of this study are available upon request.
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Acknowledgements
The authors wish to thank the extremely valuable contribution of three anonymous reviewers and the editor Philippe Van Kerm. We also acknowledge useful comments from the participants in the IZA World Labor Conference - Berlin, the Intergenerational Mobility, Gender and Family Formation in the Long Run workshop in Oslo, the annual meetings of Society of the Economics of the Household at the Paris School of Economics and in Lisbon, the Third Applied Microeconomics Workshop at the Free University of Bozen/Bolzano, the annual Meeting of Italian Society of Economic Inequality in Turin, and a seminar at University of Florence, Department of Economics and Management.
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Open access funding provided by Università degli Studi di Trento within the CRUI-CARE Agreement. William Nilsson acknowledges financial support from the Spanish Ministry of Science and Innovation grant # RTI2018-094733-B-I00.
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San Diego State University, HCEO and IZA, 5500 Campanile Drive, San Diego, CA, 92182-4485, USA
Shoshana Grossbard
University of Perugia and IZA, Via Pascoli 20, 06123, Perugia, Italy
Lucia Mangiavacchi
University of the Balearic Islands, Cra. de Valldemossa km 7.5, 07122, Palma, Spain
William Nilsson
University of Trento and IZA, Via Verdi 26, 38122, Trento, Italy
Luca Piccoli
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Grossbard, S., Mangiavacchi, L., Nilsson, W. et al. Spouses’ earnings association and inequality: A non-linear perspective. J Econ Inequal 20, 611–638 [2022]. //doi.org/10.1007/s10888-022-09539-5