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Demography

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24.08.2020

The Wealth of Parents: Trends Over Time in Assortative Mating Based on Parental Wealth

verfasst von: Sander Wagner, Diederik Boertien, Mette Gørtz

Erschienen in: Demography | Ausgabe 5/2020

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Abstract

This article describes trends in parental wealth homogamy among union cohorts formed between 1987 and 2013 in Denmark. Using high-quality register data on the wealth of parents during the year of partnering, we show that the correlation between partners’ levels of parental wealth is considerably lower compared with estimates from research on other countries. Nonetheless, parental wealth homogamy is high at the very top of the parental wealth distribution, and individuals from wealthy families are relatively unlikely to partner with individuals from families with low wealth. Parental wealth correlations among partners are higher when only parental assets rather than net wealth are examined, implying that the former might be a better measure for studying many social stratification processes. Most specifications indicate that homogamy increased in the 2000s relative to the 1990s, but trends can vary depending on methodological choices. The increasing levels of parental wealth homogamy raise concerns that over time, partnering behavior has become more consequential for wealth inequality between couples.

Vorheriger Artikel The Direct Effects of Legal Same-Sex Marriage in the United States: Evidence From Massachusetts

Nächster Artikel The Direct Effect of Taxes and Transfers on Changes in the U.S. Income Distribution, 1967–2015

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The category cohabited without children includes only households of two unrelated adults who had an age difference of less than 15 years and who were not related by family ties. A small minority of cases might therefore not regard romantically involved individuals. In robustness checks, we exclude unions that lasted less than three years to filter out such possible arrangements as much as possible, and results are unchanged; see Fig. A1 in the online appendix.

Figure B1 in the online appendix shows the distribution of cases that had no parental identification numbers by age and year. In the online appendix, we also discuss various robustness checks that address concerns about whether a changing age composition of the sample affected results (e.g., including sample weights to compensate for possible unequal probabilities of inclusion by birth year).

The results are robust. See Fig. C1 in the online appendix.

Tax-assessed housing values have historically not always reflected fully the market values at the time. Following Boserup et al. (2013) and Browning et al. (2013), we adjust tax-assessed housing values with a factor that reflects the average relationship between market values of traded houses and average tax-assessed values, thus arriving at an imputed estimate of the market value of housing wealth.

All wealth and income components are deflated with a GDP deflator to the 2010 price level.

Robustness checks calculating percentiles based on the wealth rank of all parents with children aged 18–35 produce practically identical results; see section D of the online appendix. This wealth rank is also used for our description of partnering probabilities by parental wealth (see Fig. 4).

In reality, we calculate the percentiles on the distribution of year normalized wealth. Thus, instead of w_{pi, y = u}, we calculate (w_{pi, y = u} − μ_y = u(w_p)) / sd_y = u(w_p), meaning that we substract the average of parental wealth in the year of union formation and divide by its standard deviation. This results in the same distribution except that it allows us to pull forward the wealth of deceased parents in a comparable way and integrate it into the wealth distribution of the year that their child formed a union.

In these cases, parental wealth is normalized in the year both parents were still alive, and this value is subsequently used in the calculation of the parental wealth rank for each annual union cohort.

In 2018, one in four Danish couples were cohabiting rather than married, and the same cohabitation rate applies to couples with children, according to own calculations based on data from Statistics Denmark (www.statistikbanken.dk).

Information on tax-assessed housing values should, in principle, reflect market values for comparable traded houses. However, given that the majority of houses are not traded each year, the tax authorities’ estimated market values of houses may be too low (high), which can happen because specific unobserved characteristics (e.g., interior design, such as a new kitchen or bathrooms) are not taken into account by valuation authorities. Thus, the higher actual market values can translate into higher mortgages compared with the value of the house as indicated by the taxable values available in the data.

With financial deregulation and various reforms through the 1990s and early 2000s, house owners’ access to, for example, refinancing their mortgage debt, implied on average an increase in debt in relation to housing values (Browning et al. 2013).

For part of the sample, we do not observe all partnerships because partners are recorded only from 1986 onward. Some of the first partnerships we observe in the data might therefore in fact be a second, third, or higher-order partner of an individual.

An animated version is available at https://media.giphy.com/media/64anFirdCTXZYWRirY/giphy.gif. Section E of the online appendix also provides estimates of changes over time in the chances of partnering. The relationship between parental wealth and forming a first partnership during the observation period is relatively stable across union cohorts. The chances of forming a new partnership in any given year slightly declined for individuals with wealthy parents compared with individuals with less parental wealth due to increases in repartnering over time.

Part of the nonlinearity persists for the unions formed before 1997, which likely reflects changes in how some business assets were recorded. Before 1997, business assets were reported net of debts, and our indicator of assets could therefore still take on negative values only before 1997.

Robustness checks including controls for all parents’ and partners’ ages lead to similar results; see section G of the online appendix.

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Titel: The Wealth of Parents: Trends Over Time in Assortative Mating Based on Parental Wealth
verfasst von: Sander Wagner
Diederik Boertien
Mette Gørtz
Publikationsdatum: 24.08.2020
Verlag: Springer US
Erschienen in: Demography / Ausgabe 5/2020
Print ISSN: 0070-3370
Elektronische ISSN: 1533-7790
DOI: https://doi.org/10.1007/s13524-020-00906-3

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