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1 Introduction Assortative matching and persistent inequality: Evidence from the world's most exclusive marriage market Marc Goni~ 1 This Version September 2015 Abstract: Why do people marry similar others? Using data on peerage marriages in nineteenth century Britain, I find that search costs and segregation in the marriage market can generate sorting without resort to preferences. Peers typically courted in the London Season, a centralized marriage market taking place each year. As Queen Victoria went into mourning for her husband, the Season was interrupted (1861{63), raising search costs and reducing market segregation. I find that the cohort of women affected by the interruption were 80% more likely to marry a commoner. Sorting along landed wealth decreased by 50% within the peerage. My second contribution is to show that marital sorting can contribute to wealth inequality in the long-run. In 1870, landownership was more concentrated in counties where intermarriage had been lower since c.1500. Finally, I discuss how inequality delayed the provision of public schooling in England and Wales. JEL Codes: J12, C78, D63, N33. Keywords: Marital assortative matching, search costs, marriage market segmenta- tion, wealth inequality. It is a truth universally acknowledged, that a single man in possession of a good fortune, must be in want of a wife. Jane Austen, Pride and Prejudice. 1 Introduction One of the hallmarks of modern marriage in OECD countries is that people tend to marry other people who have similar education, income, or social status (Chen et al. 2013). Marital assortative matching has important implications for inequality and income redistribution (Fernandez and Rogerson 2001, Fernandez et al. 2005, 1I am grateful to Hans-Joachim Voth for his advice. I also thank Ran Abramitzky, Dan Bogart, Davide Cantoni, Greg Clark, Deborah Cohen, Mauricio Drelichman, Jan Eeckhout, Nancy Ellen- berger, Gabrielle Fack, Ray Fisman, Sebastian Galiani, Gino Gancia, Albrecht Glitz, Regina Grafe, Alfonso Herranz-Loncan, Boyan Jovanovic, Peter Koudijs, Lee Lockwood, Joel Mokyr, Thomas Piketty, Giacomo Ponzetto, Jaume Ventura, John Wallis, and seminar participants at CREI, UPF, Northwestern, Paris School of Economics, University of Vienna, Leicester, HSE, Bank of Serbia, the 2012 MOOD, the 2012 EEA, the 2013 EHS, the 2013 Cliometrics, the 2013 SAEe, the 2015 RCI, and the 2014 EHA for helpful comments and suggestions. The Cambridge Group for the History of Population and Social Structure kindly shared data. 1 Greenwood et al. 2014). To investigate these implications further, it is crucial to first understand why do people marry similar others. Homophily | a preference for others who are like ourselves | is only one reason for assortative matching. In addition, the people we meet also circumscribes the set of mates we can chose from. In other words, every relationship not only reflects who we chose but also depends on who we meet. A robust prediction of marriage models is that search frictions affect marriage outcomes (Burdett and Coles 1997, Eeckhout 1999, Shimer and Smith 2000, Bloch and Ryder 2000, Adachi 2003, Atakan 2006, Jacquet and Tan 2007). Therefore, any process that reduces search costs for partners or affects choice sets of potential mates (e.g., online dating) could well lead to greater sorting and hence greater inequality. Confirming this prediction with data is not straightforward. Recent empirical work has used speed dating (Fisman et al. 2008), marriage ads in newspapers (Banerjee et al. 2013), or dating websites (Hitsch et al. 2010). Results are at odds with the theory | preferences appear to be an important determinant of sorting, but the matching technology does not seem to clearly affect all outcomes even when it reduces search costs and affects choice sets of potential mates. Does this discrepancy reflect flaws in search theory or in modern-day data? Dating is very different from marriage. In most cases, it does not reflect the long-term partnership formation at the core of search and matching theory. Relating marriage outcomes to the matching technology is also complicated by the fact that the latter is hard to measure. In modern marriage markets, members of the opposite sex continuously interact in a multitude of settings. As a consequence, it is virtually impossible to isolate a particular matching technology from other courtship processes. In this paper, I use a unique historical setting to investigate the causes of sorting in marriages and its implications for the distribution of wealth. In the nineteenth century, from Easter to August each year, a string of social events was held in London to \aid the introduction and courtship of marriageable age children of the nobility and gentry"2 | the London Season. Courtship in noble circles was largely restricted to London; in most cases, the only place where a young aristocrat could speak with a girl was at a ball during the Season. Guests were carefully selected by social status, and the high cost involved in participating even excluded aristocrats if they were pressed for money.3 In economic terms, the Season effectively reduced search costs 2Motto of the London Season at londonseason.net 3The cost was driven by the need to host large parties in a stately London home; only those who 2 for partners and, by segmenting the market, restricted the choice set of potential mates. Crucially, the Season was interrupted by a major, unanticipated, exogenous shock: the death of Prince Albert. When Queen Victoria went into mourning, all royal dinners, balls, and luncheons were cancelled for three consecutive years (1861{ 63). I use this large shock to identify the effects of the Season on marriage outcomes. If search costs and marriage market segmentation can generate assortative matching, the interruption of the Season should reduce marital sorting. If, instead, sorting is mainly driven by preferences, marriage outcomes should remain largely unaffected. I find a clear, strong link between search costs. marriage market segmentation, and marital sorting. Using a combination of hand-collected and published sources on peerage marriages, I find that the cohort of women affected by the interruption of the Season were 80 percent more likely to marry a commoner, sorting along landed wealth decreased by 50 percent, and spouses came from geographically adjacent places. In addition to this quasi-experimental approach, I estimate an instrumental variables model with the interruption of the Season and changes in the size of the marriageable cohort as sources of exogenous variation in attendance at royal parties in 1851{75. I find that a 5 percent increase in attendance to the Season decreases by 1 percentage point the probability of marrying a commoner, increases by 1.5{2 percentage points the probability of marrying a spouse from a family with similar landed wealth, and increases in 3.4 miles the distance between spouses' family seats. My second main contribution is to examine whether these sorting patterns hamper social mobility and contribute to wealth inequality. A counterfactual analysis shows that if the Season had not existed, marriages between peers' daughters and com- moners' sons would have been 30 percent higher between 1851{75. The institutional innovation of the Season, thus, helped the British political and economic elite erect an effective barrier that kept out newcomers. Because marriage is important for the intergenerational transmission of property, marital sorting significantly contributed to wealth inequality. I link information on 10,364 marriages spanning 11 generations between 1531 and 1880 to county-level measures of landownership concentration in the 1870s. I find that a 30 percent increase in intermarriage | the estimated effect of suppressing the Season | would be associated to a 3 points reduction in the Gini index for land inequality and to and to a 50 percent reduction in the share of land in the hands of peers. issued invitations to balls, dinners, and luncheons could expect to receive them. 3 The top of the wealth distribution in England has remained largely unchanged from 1800 (Clark and Cummins 2015). Compared to the elite of many other countries, the British aristocracy not only \held the lion's share of land, wealth, and political power in the world's greatest empire" (Cannadine 1990),4 its members towered over their continental cousins in terms of exclusivity, riches, and political influence. Did this persistent political and economic inequality | result of entry barriers like the Season | have any lasting consequences? I compare the outcomes of Forster's Edu- cation Act (1870) | the first attempt to introduce state education in England and Wales | across counties. In line with the predictions of Sokoloff and Engerman(2000) and Galor et al.(2009), the evidence suggests that counties where landownership was more concentrated systematically under-invested in state education. The empirical setting I examine offers a number of advantages. First, it allows me to open the \black box" of the matching technology. Marriage markets today are typically informal. We can only guess who is on the market and who meets whom. In contrast, in the Season, young ladies were even presented to the Queen at court, announcing of who was on the marriage market each year. Second, Prince Albert's death generates as good as random assignment into the Season. His demise and especially Queen Victoria's long mourning were unexpected (Ellis 1977, Hobhouse 1983). Furthermore, cohorts that did and did not marry during the interruption of the Season are essentially identical in terms of observables. Selection based on unobservables is unlikely, as there was a high pressure to marry young in Victorian Britain: if a lady was not engaged two or three Seasons after \coming out" into society, she was written off as a failure (Davidoff 1973: 52). Finally, in contrast to studies using modern-day data, this historical case study allows me to examine whether marital sorting contributes to wealth inequality in the long-run.
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