Turns out marriage and income inequality go pretty well together

Diatribe first, then critique.

Brad Wilcox and Bob Lerman have a new report arguing, among other things:

Had marriage rates not declined substantially among parents, many more families would have attained middle-class incomes, and the inequality across families would have increased at a slower rate.

It’s well established that falling marriage rates are contributing to family income inequality. However, increasing inequality is not an inevitable result of low marriage rates. In general, among rich countries, higher marriage rates are associated with higher levels of income inequality. The USA is a clear outlier here:

marriage-inequality2

It’s possible marriage increases income inequality in general. It’s also possible that people don’t get married as much when they’re not worried about inequality. Regardless, this shows high marriage rates are quite compatible with high inequality.

Falling marriage does contribute to rising inequality in the USA, because of how it’s manifesting: increasing selectivity in marriage, so that richer people are getting and staying married more; and increasing social class endogamy, so that there are more two-high-income families lording over more one-low-income families. And all of that is exacerbated by widening underlying inequality, with high-end incomes pulling away from low-end incomes, relatively unchecked by income redistribution.

One obvious solution is to take money away from married high-income people and give it to single low-income people. With all the benefits that married people get — many of them through no special effort of their own, but rather as a result of their social status at birth, race, health, good looks, legal perks, or lucky breaks — it seems reasonable to tax marriage, like a windfall profits tax, or an inheritance tax, or a progressive income tax. But, if you’re squeamish about taxing something “good” like marriage, then just taxing wealth a little more would accomplish much the same thing. This elegant solution would decrease inequality, increase well-being for poor people, and equalize life chances for children (who are the future, I believe). In other words, it’s out of the question.

A second, less-obvious (but more-often mentioned) solution is more marriage. Low-income single people could become high-income married people. Or, failing that (which they would) they could settle for becoming low-income married people. Besides the fact that efforts to promote marriage have been a complete failure, would this even make poor single people and their children better off?

The family science right-wing establishment says Yes. To the poor singles, they say: “See how well married people are doing? Get married and you’ll be like them (also: you won’t get raped so much, you sluts.)” To their rich donors and political allies, they say, “Make them earn their benefits by demonstrating their moral fiber and manning up.” The welfare reform attempted this, and successfully forced many single mothers into the labor force in the cause of character development  — but it failed in its goal of marrying them off.

So more marriage is the new agenda — and the family right has a plan that leads inexorably to success (for them): either by successfully raising marriage rates among the poor (extremely unlikely), or by justifying the continued denial of basic welfare to the poor and shoring up the political case against economic redistribution (extremely likely).

A few notes on the first part of their report

Question: Why should we think the unmarried people would get the same benefits from marriage that currently married people do? If marriage is becoming increasingly selective, then you can’t assume the benefits observed among actually married people would be reaped by those who have been left out (or opted out) of the increasingly stringent marriage selection process. They may not have the assets that lead to marriage benefits — skills of many kinds, wealth, social networks, and so on.

Wilcox and Lerman say family income would have risen more — and there would be less inequality — if more people were married, because married couple incomes rose faster than average. They show this:

willerfaminc

Setting aside the completely misleading use of an area chart, and the gruesome y-axis truncation, this shows that married-parent families have had faster than average income growth. One obvious reason for this is women’s rising labor force participation, at least into the 1990s. That has a big effect on income at the median, which is the line this is showing for each group (though the area form makes it look like it’s some kind of distribution). Rising income at the median would reduce income inequality. The fact that single-parent families are dragging down the average contributes to growing inequality and a stagnant overall median.

But the top is where most inequality is being generated. Looking at the top will help us see not just growing inequality, but also why getting poor people to get married won’t help them as much as Wilcox and Lerman think it would. Let’s add the 90th and 10th percentiles to the married parent income trends. My figure shows that the married parent family’s 90th percentile’s income has risen 39% since 1979, while the median has risen 14%. But the 10th percentile’s income has fallen 12%.

married couple ineq.xlsx

So, if poor single people finally get with it and start getting married, which married parents are they going to look like?

The chart shows dramatically increasing inequality among married-couple families. Pouring more married couples into the bottom of the distribution doesn’t seem likely to fix that. And, as Jordan Weissman pointed out, the family structure story has nothing to do with the huge rise in incomes in the top 1% and .1%, which are central to the inequality story.

Till now I’ve skirted some thorny technical issues to make a comparison comparable to Wilcox/Lerman’s data. But assessments of family income inequality are tricky. Marrying two low earners creates one family household with twice the income. That shows up as a rise in incomes per family, but what is the real gain? They get economies of scale, but most descriptions (like Wilcox/Lerman’s) don’t take that into account. And the children might increase their consumption from greater access to the second income, but that’s hidden within the family black box.

To see how changes in family income distributions affect children, it’s useful to use a family size adjustment. I like one in here that counts kids as seven-tenths of an adult, and scales the family income by .65. (So you just divide family income by this: [(adults+(.70*kids)).^65].) Now you can track children’s cash on hand much better. I also prefer to use household rather than family income and composition, because the Census definition of families is narrow. In the charts so far, for example, parents’ cohabiting partners’ income is not included.

So here is the inequality trend for children — using the Gini index for needs-adjusted household income (code here) — by parents’ marital status:

kid-gini-1980-2012.xlsx

This shows that the increase in family inequality has been much more dramatic for married-couple families than single-parent families. That’s those high-income couples pulling away from the middle and the bottom. On the other hand, inequality has been and remains higher for single-parent families. Note that the inequality for all children is not just the average of the two other lines, because it also includes the inequality between married-couple and single-parent families.

So moving people from single to married would have reduce inequality more in 1980 than now, but just on composition it might still help if it boosted cash per kid through access and efficiency. Whether that benefit would outweigh the costs is not clear. If people not married yet aren’t just like the people who are — they may have lower skills and resources of various kinds, for example — marriage might not facilitate those transfers. Plus, it’s only good if the people want to be married.

Anyway, point is, married-couple families are doing pretty well at increased income inequality all by themselves.

23 Comments

Filed under Research reports

23 responses to “Turns out marriage and income inequality go pretty well together

  1. Derek Martin

    Good post, but I can already see the eye rolls coming from Uncle Bradley’s target audience. “Who cares what happens in Europe, or the rest of the world for that matter? This is ‘Merica, dammit! Besides, didn’t we fight a war against the Germans, the Italians, the Japanese, and the Koreans? Why should we pay attention to anything they do?” Don’t try to confuse me with your facts; I just know that single mothers are the root cause of all our troubles.

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  2. Gosta Esping-Andersen

    The cross-national comparison makes little sense unless you also include cohabiting couples. Gosta Esping-Andersen

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  3. vijay

    Something is wrong with Figure 4. Why is the GINI coefficient of all children in 2012 same as that of children with non-married parents? That implies that there are no children with married parents in 2012. Up to 2000, it looks reasonable, with increasingly more children married out of wedlock by year.

    In any case, this figure dos not demonstrate much. We know income inequality has suffered over the last thirty years. Has it gotten worse for unmarried families? What you need to do is to plot gini coefficient of married families, families with single parents, non-dimensionalized by all families, or the nation as a whole. Then, it is possible to argue one way or other. Figure 1 is particularly meaningless, givn we have almost nothing in common with japan; or Denmark; or Sweden; or Finland.

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    • Vijay – you don’t understand Figure 4. I suggest you have another look at the text.

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      • vijay

        I did read it and do understand it (I think that you have a low perception of readers who are not in the academe).

        Read my comment back. If inequality among the families with all children is the same as the coefficient with non-married parents, something is wrong with your adjustment. We know that a majority of families with unmarried parents are indeed families with missing father. By your definition, you have are dividing by number -1 . This will lead to a higher family income and less inequality for families with single parents. Of course, income among families with single parents is like 50% or lower than married families; the result of this nondimensionalization is reflected by your graph; little change in inequality for families with single parents, over time.

        I argue that you are using a data massaging that supports your predetermined model: inequality is worse among married families than with families with a single parent.

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  4. As the issue of bias against conservatives is coming here from time to time, I thought maybe this article would be of interests to blog visiters (and maybe even blog owner). An abstract: if you think there is no discrimination and no problem of discrimination, it means probably you are liberal doing the discrimination.

    http://www.newyorker.com/science/maria-konnikova/social-psychology-biased-republicans

    One of the quotes relevant:
    ” As the degree of conservatism rose, so, too, did the hostility that people experienced. Conservatives really were significantly more afraid to speak out. Meanwhile, the liberals thought that tolerance was high for everyone. The more liberal they were, the less they thought discrimination of any sort would take place.”

    Liked by 2 people

  5. Dave Thomas

    I’m always amazed at how someone compares the ethnically diverse, mixed government, non-socialist 315 million people in the geographically immense United States with small, heterogenous virtually tribal, monarchies and parliamentary governments, with socialist and dictatorial governments, and populations smaller than our large cities in geographic areas smaller than our individual state with tax codes and property rights that don’t resemble ours at all.

    Wilcox and Lehrman obviously missed the lecture in “rational thinking 101” about the invalid nature of comparing apples and oranges.

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    • Dave – you join Vijay above in failing to grasp the point of the figure. Of course societies are different. The point is not to establish a relationship between gini and marriage – that would require actual research. The point is to demonstrate that there are cases in which low marriage rates coexist with low levels of inequality – and the reverse. This is to undermine the simplistic assertion that low marriage rates necessarily imply high inequality.

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