Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/112758
Authors: 
Pestel, Nico
Year of Publication: 
2015
Series/Report no.: 
ZEW Discussion Papers 15-047
Abstract: 
This paper examines to what extent marital sorting affects cross-sectional earnings inequality in Germany over the past three decades, while explicitly taking into account labor supply choices. Using rich micro data, the observed distribution of couples' earnings is compared to a counterfactual of randomly matched spouses. Hypothetical earnings are predicted based on a structural model of household labor supply. For West Germany, a positive effect of marital sorting on inequality is found after adjusting for labor supply behavior, while the effect is limited when earnings are taken as given. This means that there is positive sorting in earnings potential which is veiled by relatively low female labor force participation. In East Germany, the impact of marital sorting on inequality is highly disequalizing irrespective of adjusting for labor supply choices. This is mainly due to the fact that East German women are much more attached to the labor market.
Subjects: 
earnings inequality
marital sorting
labor supply
Germany
JEL: 
D31
D63
J12
J22
Document Type: 
Working Paper

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