The impact of assortative mating on income inequality in Switzerland

Homogamy is one of the possible drivers of income inequality in society. This study analyses the influence of homogamy in partners’ earnings on income inequality in Switzerland using data of the Swiss Household Panel from 1999 to 2015. The first part monitors homogamy in educational levels, parental education, hourly wages and realised yearly earnings using correlation coefficients. The second part estimates the impact of assortative mating on income inequality using counterfactual simulations. By focusing not only on realised earnings but also on hourly wages, we can distinguish between the effect of homogamy from the effects of labour supply adjustments. In addition, we take into account the selection into partnership. Results show a very weak correlation between partners’ realised earnings. The observed Gini coefficient of realised earnings is not different from the Gini in a scenario where partners match independently of their earnings. Two processes explain these results. First, there is relatively little homogamy in hourly wages. Second, adjustments of labour supply to partner’s characteristics have an equalising effect that can offset the impact of homogamy.