The Role of Inheritance and Labor Income in Marital Choices

From Honoré de Balzac to Jane Austen, many nineteenth century novels give examples of marriage of convenience in which the spousal wealth is determinant. Today, people probably marry more frequently for love, and family has less power than during the nineteenth century. But has the importance of inheritance in marital choices disappeared? This research is grounded upon recent findings on long-term trends in inheritance and wealth. Whether this situation is important for the dynamics of inequality over time depends, among other things, on marital decisions – do heirs marry heiresses? – as family plays a decisive role in the transmission of capital, be it human, social or material.

The abundant economic and sociological literature on assortative mating mostly focuses on variables like education and social status. In my paper, I investigate for the first time the role of inheritance in marital choices. Specifically, I measure the extent of assortative mating by inherited wealth. Moreover, I analyse the substitutability between inheritance and labor income. In other words, I wonder if human capital can compensate for a lack of parental wealth. To do so, I use the French wealth survey Patrimoine from 1992 to 2010. An important aspect of this data is that we have information about parental wealth (type of assets owned by the parents) to estimate respondents’ expected inheritance and hence to consider the total inherited wealth someone will receive rather than simply the observed estate declared at the time of the survey.

The estimates reveal a strong similarity of spousal traits in terms of inheritance and labour income. My preferred estimate indicates that the correlation of inheritance between spouses equals 0.25. Marital sorting is significantly stronger for inherited wealth than for labour income, especially at the top of the distribution. More specifically, the greater the difference between a man’s and a woman’s inherited wealth, the more unlikely they are to form a couple.

The second research question addressed in this article is about people’s sensitivity to their spouse’s source of wealth. There is clear proof that labour income and inheritance are poor substitutes. Specifically, there is a partition between the two dimensions: heirs marry heiresses (or the reverse) and income earners marry income earners. The degree of marital sorting remains stable between 1992 and 2010, and substitutability increases slightly at the end of the study period. In other words, in absence of parental wealth, it is still difficult today to move up the social ladder by marrying rich heiresses.

While education explains a large share of martial sorting in terms of labour income, it explains only 20% of the correlation for inheritance. I suggest two complementary ideas to analyse these results. First, the socialization process may explain why people from the same socioeconomic background (and hence with potentially similar levels of inheritance) have a greater opportunity for interaction and are more likely to share common tastes. Moreover, matrimonial strategies and social prestige attached to inheritance are likely to reinforce this mechanism. Second, inherited wealth and labour income differ in terms of their timing and of their treatment under different matrimonial property regimes. These differences may affect individual preferences and influence the choice of spouse.

These results have major implications for the analysis of intergenerational inequality since they provide evidence of wealth concentration caused by marital choices (compared with a society in which random matching would prevail). In order to fully understand the implications of our results we must also consider changes in the family since the time of Balzac and Maupassant in the nineteenth century. At least two complementary recent changes are likely to make the consequences of assortative mating on inequality even more complex to study. First, divorce and remarriage are more frequent nowadays. This implies that people can have several partners during their life and that several wealth transfers between spouses can occur (alimonies, redistribution of common assets, etc.). Second, recent evidence indicates that there is an increasing tendency among French couples to separate their assets either by not marrying (equivalent, de facto, to a separation of assets) or by choosing separate property contracts when they marry. These issues are beyond the scope of this article but changes in family structure must be taken into account when examining the role of marital sorting in intergenerational inequality.

Reference:

N. Fremeaux, (2014), “The Role of Inheritance and Labour Income in Marital Choices”, Population, 69(4), 495-530.


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