Hanno Foerster, Boston College

"Job Displacement, Remarriage, and Marital Sorting"

Abstract

We investigate how job displacement affects whom men marry, and study implications for marriage market matching theory. Leveraging quasi-experimental variation from Danish establishment closures, we show that job displacement leads men to break up if matched with low earning women and to re-match with higher earning women. We use a general marriage market search and matching model as conceptual framework, to derive several implications of our empirical findings: (i) husband’s and wife’s earnings are substitutes, rather than complements on the marriage market (ii) our findings are challenging to reconcile with one-dimensional matching, while consistent with multidimensional matching (iii) a substantial part of the cross-sectional correlation in spouses’ incomes arises spuriously from sorting on unobserved characteristics. We highlight the relevance of our results, by contrasting the impact of simulated tax reforms on marital sorting and income inequality in one-dimensional versus multidimensional specifications of our framework.

His research interests are in Labor Economics, Family Economics and Applied Microeconometrics. In his work he develops and estimates structural economic models to study questions relevant for labor market and family policy.

You can read more about Hanno Foerster here

CEBI contact: Thomas Høgholm Jørgensen