FAMINEQ

Over the last 50 years, industrialized countries have undergone major economic and demographic changes that affected both the distribution of earnings across individuals and the family structure in which these individuals live. Since the 1970s, inequality in the distribution of individual income has significantly increased in most OECD countries. Over the same period, family structure and behavior experienced deep changes. First, changes in demographic behavior have led to the emergence of new family models: decline in marriage and birth rates, delayed transitions into cohabitation, rise in divorce rates and single parenthood. Second, gender inequality has narrowed significantly in both educational attainment and labor force participation, leading to a significant increase in the share of skilled employed women and affecting household composition. In spite of its importance, the interplay between these economic and demographic trends has remained largely unexplored. Our research project develops innovative empirical and theoretical research that allows understanding the different facets of the family-inequality nexus. From a theoretical perspective, the project will contribute to the development of collective models of household decisions and marriage market models. Collective models of the household assume that each household member has specific individual preferences and that collective decisions made by the household results from bargaining and/or cooperation between household members. Such models are essential to (a) understand how better opportunities for women may have modified the balance of power within the household and to (b) measure changes in welfare, and thus inequality, at the individual level that result from recent economic and demographic trends. They will be generalized to incorporate household scale economies and to account for children. On the other hand, marriage market models start from the distribution of men and women in the population with some characteristics and describe who marries whom and why. They allow disentangling the respective roles of the individual mating preferences and the aggregate distribution of potential partners’ characteristics in observed mating patterns. Finally, the project will also contribute to merge these two fields of research that are among the most dynamic in recent applied microeconomics. From an empirical perspective, the project will help reveal the fundamental mechanisms behind rising inequalities. One of the objectives is indeed to provide a comprehensive assessment of assortative mating in France and other countries, focusing not only on assortativeness by education and social origin but also by economic characteristics, in particular earnings and labor supply. Traditional reduced-form techniques but also more sophisticated structural-approaches based on marriage market models will be used to this end. Understanding mating behavior will therefore contribute to evaluate inequality between households. Another objective is to analyze how family characteristics determine the intergenerational transmission of economic advantages. Using collective models, it is possible to evaluate what parents spend for children. More generally, the influence of family background on individual success (measured by various indicators) and inequality will be evaluated using until now under-exploited data sources. The ultimate objective is to measure the changes in economic inequality in France and other comparable countries over the last decades, and go beyond state-of-the-art research by relying on more adequate models and better data. The project will focus on individual welfare (and not household welfare) and examine key stages of the production of inequality and its recent changes (changes in mating behavior and family composition, intergenerational transmission, changes in the intra-household balance of power.