Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/295826 
Year of Publication: 
2024
Series/Report no.: 
IZA Discussion Papers No. 16803
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
What preferences do partners hold over their relative income within the household? We provide a flexible framework of preferences over relative income within the household that captures various motives, including inequality aversion and a preference for being the primary earner. We study the role of these preferences for marital selection, separation and household public good provision in a marriage market matching model with search frictions. We test the model predictions using large administrative tax data from Germany. We document the existence of a kink point in the relative income distribution at the point of spousal income equality, consistent with the presence of kinked preferences over relative income. We also find the presence of a convex kink in wives' household public good provision, suggesting that women bear the incidence of spousal relative income preferences. To disentangle the preferences of women and men, we implement a survey experiment. Our results indicate that women exhibit inequality aversion while men exhibit a preference for being the primary earner.
Subjects: 
relative income concerns
relative income distribution
JEL: 
D63
D64
D91
J12
J16
Document Type: 
Working Paper

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