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Title
Why Does Spousal Education Matter for Earnings? Assortative Mating and Cross‐Productivity
Permalink
https://escholarship.org/uc/item/6t9391gf
Journal
Journal of Labor Economics, 27(4)
ISSN
0734-306X
Authors
Huang, Chong
Li, Hongbin
Liu, Pak Wai
et al.
Publication Date
2009-10-01
DOI
10.1086/644746
Copyright Information
This work is made available under the terms of a Creative Commons Attribution License,
availalbe at https://creativecommons.org/licenses/by/4.0/
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[ Journal of Labor Economics, 2009, vol. 27, no. 4]
䉷 2009 by The University of Chicago. All rights reserved.
0734-306X/2009/2704-0004$10.00
Why Does Spousal Education
Matter for Earnings? Assortative Mating
and Cross-Productivity
Chong Huang, University of Pennsylvania
Hongbin Li, Tsinghua University
Pak Wai Liu, Chinese University of Hong Kong
Junsen Zhang, Chinese University of Hong Kong
Spousal education is correlated with earnings for two reasons: cross-
productivity between couples and assortative mating. This article em-
pirically disentangles the two effects by using Chinese twins data. We
have two innovations: using twins data to control for the unob-
served mating effect in our estimations and estimating both current
and wedding-time earnings equations. We find that both cross-
productivity and mating are important in explaining the current
earnings. Although the mating effect exists for both husbands and
wives, the cross-productivity effect mainly runs from Chinese hus-
bands to wives. Our findings shed light on the theories of human
capital, marriage, and the family.
I. Introduction
In the human capital literature, economists have focused on an in-
dividual’s formal schooling (Heckman and Polachek 1974; Mincer 1974;
The work described in this article was substantially supported by a grant from
the Research Grants Council of the Hong Kong Special Administrative Region
634 Huang et al.
Becker 1993; Ashenfelter and Krueger 1994; Behrman, Rosenzweig, and
Taubman 1994; Card 1999). Two issues of particular interest to econ-
omists are investment in education and the return to education. Although
formal education is an important way to obtain human capital, it can be
accumulated in many different ways. Military service (De Tray 1982), train-
ing programs (Heckman, Lalonde, and Smith 1999), learning by doing
(Foster and Rosenzweig 1995), and learning from family members (Behr-
man, Rosenzweig, and Vashishtha 1999) and neighbors (Foster and Ro-
senzweig 1995) can all help a person accumulate human capital, although
very little is known about how much these alternative learning channels
can contribute.
This article studies a very unique channel of human capital accumu-
lation: learning from a spouse. Economists have long noticed the positive
relationship between spousal education and a person’s own earnings (Ben-
ham 1974; Neuman and Ziderman 1992; Tiefenthaler 1997). Two major
hypotheses have been put forward to interpret this positive correlation.
First, the cross-productivity hypothesis maintains that spousal education
helps an individual accumulate human capital and increase earnings: for
example, couples can share ideas within the family, which is considered
to be productive (see, e.g., Benham 1974; Scully 1979; Kenny 1983; Wong
1986; Lam and Schoeni 1993; Lefgren and McIntyre 2006). Second, the
observed correlation may simply be a consequence of the assortative mat-
ing effect in the marriage market; that is, those who marry well-educated
people are of higher ability (Welch 1974; Liu and Zhang 1999; Lefgren
and McIntyre 2006). According to Becker (1973, 1974), both hypotheses
can, in theory, be correct. In econometric language, the cross-productivity
effect is the causal effect of spousal education on earnings, but the mating
effect is caused by omitted variables. An ordinary least squares (OLS)
estimate of the effect of spousal education on earnings may not show the
causal effect because spousal education is likely to pick up one’s own
ability or the mating effect (Boulier and Rosenzweig 1984).
We will attempt to distinguish empirically between cross-productivity
and the mating effect by employing unique data on twins that we recently
collected from urban China. There are two major innovations in our design
of the tests and the data collection method. The first is the use of the data
on twins to control for omitted variable bias, or the mating effect, in our
estimations. Since monozygotic (MZ; from the same egg) twins possess
identical genes and family background, their unobservable abilities and
backgrounds are also very similar. Hence, within-twin difference would
(no. CUHK4358/01H). We thank Frank McIntyre for valuable comments and
suggestions. Junsen Zhang also thanks NIH HD046144 for partial financial sup-
port. The usual disclaimer applies. Contact the corresponding author, Junsen
Zhang, at jszhang@cuhk.edu.hk.
Spousal Education and Earnings 635
largely remove the bias caused by the assortative mating effect with respect
to unobservable abilities or family background.
1
However, within-twin es-
timations may not completely remove all of the omitted abilities (or the
mating effect) because these abilities may not be fully explained by genes
or family background. Our second innovation tackles this issue. In our
survey, we collected information on individuals’ earnings and other variables
at the time of marriage, and we estimate a wedding-time earnings equation.
By comparing the estimated effects of current earnings and wedding-time
earnings, we can distinguish the cross-productivity effect from the mating
effect. Because the cross-productivity effect takes time to be realized, it is
relatively unimportant at the time of the wedding. Any effect of spousal
education on wedding-time earnings, therefore, would be more likely to
stem from the mating effect.
The empirical results suggest the existence of the mating effect for both
females and males, but there is strong evidence of cross-productivity effect
only from husbands to wives. The magnitude of a cross-productivity effect
is large: an additional year of a husband’s schooling increases the wife’s
earnings by 3.3%. Our results are robust when we control for the mea-
surement error in own education. We also find that the husband’s education
increases his wife’s earnings by raising her hourly wage rate rather than
her work hours.
Our findings that spousal education has a cross-productivity effect shed
light on our understanding of the theories of human capital, marriage,
and the family. Recently, there have been advances in the empirical lit-
erature of human capital that use novel methods to control for unob-
servables and to measure the causal effect of human capital on earnings
and on intergenerational transfer. However, this literature has focused
either on an individual’s own human capital (see, e.g., Ashenfelter and
Krueger 1994; Isacsson 1999, 2004, 2007) or on parental human capital
(see, e.g., Behrman and Rosenzweig 2002; Plug 2004). As far as we know,
few studies have attempted to measure the causal effect of spousal edu-
cation on earnings. Our findings suggest that marriage may improve an
individual’s human capital through learning within marriage. This is true
for Chinese wives. People can accumulate human capital not only through
formal education or by having well-educated parents but also by having
a well-educated spouse. This suggests that we should rethink the process
of human capital accumulation and, in particular, that we should pay more
attention to channels other than an individual’s own schooling. Formal
schooling is certainly an important way to acquire human capital, but it
is not the only way.
Our study builds upon prior literature that explicitly examines the
1
See Ashenfelter and Krueger (1994), Behrman and Rosenzweig (1999), and
Isacsson (1999, 2007) for recent studies using the twins strategy.
636 Huang et al.
existence of cross-productivity or/and the mating effect. The most closely
related paper is Lefgren and McIntyre (2006), which shows that women’s
education has both a cross-productivity effect and a mating effect.
2
How-
ever, Lefgren and McIntyre do not examine the association between men’s
education and wives’ income. They are also not satisfied with their in-
strumental variables used in the estimations. Our article differs from the
prior literature in that we identify both the mating effect and the cross-
productivity effect by using the twins strategy to control for the unob-
served mating effect and by estimating both current and wedding-time
earnings equations.
This article is organized as follows. Section II introduces the methods
of estimation that draw on twins data. Section III describes the survey
and the data. Section IV reports the empirical results. Section V concludes
the article.
II. Empirical Strategies
Our empirical work begins with estimating the log current earnings
equation, given as
c
y p X a ⫹ bsedu ⫹ Zg ⫹ m ⫹ ,(1)
ii iiii
where the subscript refers to individual ; is the logarithm of current
c
iiy
i
earnings; is individual spousal education; is the set of observed
sedu i s X
ii
family variables; is a set of observed individual variables that affectZ
i
earnings, including one’s own education, age, and gender; representsm
i
unobservable variables that also affect earnings, that is, the effect of ability
or family background; and is the disturbance term, which is assumed
i
to be independent of and .Z m
ii
The OLS estimate of in equation (1) might be regarded as the cross-b
productivity effect if we can control for the assortative mating effect by
and . Such an estimate of the cross-productivity effect is generallyZ mb
ii
biased because we normally cannot perfectly measure , which may bem
i
correlated with . This bias can also be called the assortative matingsedu
i
in education: that is, matching one’s ability or family background with
spousal education such that more able people are both likely to get higher
earnings and tend to marry better-educated partners; without controlling
for , is still a combination of both the cross-productivity effect andmb
i
the assortative mating effect, where the latter is the bias in the estimation
of the pure cross-productivity effect.
2
A somewhat related paper by Lam and Schoeni (1993) finds that the education
of fathers-in-law is more important than parental education in explaining earnings,
which suggests a mating effect. However, they do not directly study the impact
of spousal education.
