Marriage Meets the Joneses

Abstract

This paper investigates the effect of relative income on marriage. Accounting flexibly for absolute income, the ratio between a man's income and a local reference group median is a strong predictor of marital status, but only for low-income men. Relative income affects marriage even among those living with a partner. A ten percent higher reference group income is associated with a two percent reduction in marriage. We propose an identity model to explain the results.