More than in the past, we have doctors marrying other doctors, rather than nurses, basically because of an increase in assortative mating for education. Ceteris paribus, this would tend to cause greater income equality among families. Is it the main driver of increasing income inequality?
Not at all. Most of the increase over the last 30 years has been among business executives and people working in finance. Since 1979, 58% of the expansion of income of the top 1% of households has this origin. For the top 0.1% of households, it’s been 67%.
Business executives are making more relative to the average worker than they used to. The average compensation of a Fortune 500 CEO was 20 times that of his average employee in 1950, 42 times larger in 1980, 350 times larger today.
Now if hedge funds and Fortune 500 companies were being managed by married teams, dynamic duos like Justinian & Theodora or Burns & Allen, you could attribute this change to increased assortative mating. In fact, I should probably write a best-selling book on this counter-intuitive idea, even though (especially though!) it never, ever happens.
Now I’m about to say something a little dangerous – so get your nitroglycerin pills ready.
Maybe those finance guys and CEOs are delivering enormously more value than they did in the 1950s!
For those remaining readers that haven’t died laughing, increased assortative mating probably has contributed to income inequality. Just not very much. Changes in the tax code, outsourcing, automation, smothering the board of directors in cream, and inattentive stockholders all matter more.