Academic journal article Journal of Economics and Economic Education Research

An Analysis of US Household Socioeconomic Profiles Based on Marital Status and Gender

Academic journal article Journal of Economics and Economic Education Research

An Analysis of US Household Socioeconomic Profiles Based on Marital Status and Gender

Article excerpt

INTRODUCTION AND SELECTED BACKGROUND LITERATURE

Wealth inequality in the US has been increasing in fits and starts since the 1930s and particularly since the 1980s (Wolff, 1992). Increasing wealth inequality in the United States is driven by the top tail of the distribution becoming increasingly wealthy, resulting in a long tail of those with low or negative wealth (Diaz-Gimenez, Glover & Rios-Rull, 2007). Americans desire less inequality than currently exists (Norton & Ariely, 2011). The social and political implications of wealth inequality extend beyond wealth accumulation (Neill Hoch & Mohan-Neill, 2013). Wolff (1998) argues that "in a representative democracy, the distribution of power is often related to the distribution of wealth." Likewise, social and political factors that contribute to the unequal distribution of income and wealth are varied and interlocking. For these reasons, it is important to understand the demographic populations that currently show signs of difficulty in accumulating wealth.

Family structure has been shown to correlate with wealth. Married households, with or without children, are wealthier than single households (Diaz-Gimenez et al., 2007). Those married continuously are wealthier than those who have had a marriage dissolve, either by divorce or death (Wilmoth & Koso, 2002). Remarriage mitigates some of the losses accrued by marriage dissolution, but not all. Single individuals who have never married see less wealth accumulation than do those who have been married and reaped the benefits of pro-marriage policy for at least part of their lives. Cohabitation with a partner does not show similar benefits to marriage (Wilmoth & Koso, 2002). Cohabitating, non-married partners (also called Living with Partner or LWP) may share some expenses, but such sharing does not translate into increased wealth accumulation over time. Notably LWP cohabitation does not carry the same tax and policy advantages that marriage does. Women who have never been married see an 86% reduction in their overall wealth, pre-retirement, as compared to men who see a 61% reduction (Wilmoth & Koso, 2002), suggesting a gender bias in wealth accumulation.

Changes in family structure may contribute to increased inequality (Esping-Anderson, 2007; McLanahan, 2004). Single parent households have increased over time, from both never married individuals raising children and marriage dissolution. Single females with children may have increased the number of low income households (McCall & Percheski, 2010). Single females with children see the greatest intragroup income inequality of all family structures (Diaz-Gimenez, Glover & Rios-Rull, 2007). McCall and Percheski (2010) argue that there is "strong support for the hypothesis that increases in single mother families and decreases in married couple families have increased income inequality (p. 337). Wilmoth & Koso's (2002) findings that women, with or without children, see a significant reduction in wealth when they remain unmarried, supports the idea that marriage encourages wealth accumulation. Because LWP has not shown to produce similar benefits, it may be that policy benefits awarded to married couples that are not extended to cohabitating couples encourage wealth accumulation.

The wealthy are more educated (Diaz-Gimenez et al., 2007). However, education alone does not always translate to increased wealth. When considered with age, the young educated tend to have little wealth as they pay back debt acquired during schooling or establishing their households. Wealth being strongly correlated with education should not be taken as a magic bullet for addressing wealth inequality. While education increases earning potential, such education may not translate to financial literacy and increased saving behavior (Lusardi & Mitchell, 2007). In education, as in other variables, contribution to wealth accumulation interlocks with additional variables. …

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