Testing Beckers Theory of Positive Assortative Matching

In a static frictionless transferable utilities bilateral matching market with systematic and idiosyncratic payo¤s, supermodularity of the match output function implies a strong form of positive assortative matching: The equilibrium matching distribution has all positive local log odd ratios or totally positive of order 2 (TP2). A particular form of a preference for own type implies supermodularity of the match output function. Other forms imply non-TP2 behavior. Local odds ratios are not informative on whether a bilateral matching market equilibrates with or without transfers. Using white married couples in their thirties from the US 2000 census, spousal educational matching obeyed TP2 except for less than 0.2% of marriages with extreme spousal educational disparities. Using the TP2 order, there were more positive assortative matching by couples living in SMSA’s than those who do not; but not more positive assortative matching in 2000 than in 1970. There were increases in speci…c local log odds over that period. A landmark result in the theory of bilateral matching is Becker’s theory I thank Gordon Anderson and Angelo Melino for many illuminating discussions, participants at the MFI conference on New Economics of the Family, SED, UCL, Paris School of Economics, and Kevin Fawcett for excellent research assistance. I also thank SSHRC for research support.