Male wage inequality and marital dissolution: Is there a link?

After almost a century-long pattern of rising marital instability, divorce rates levelled off in 1980 and have been declining ever since. The timing of deceleration and decline in the rates of marital dissolution interestingly coincides with a period of substantial growth in wage inequality. This paper establishes a novel connection between the two phenomena and discusses potential explanations for the underlying link. Using female marital histories in a duration analysis framework combined with regional and temporal variation in the pattern of male wage dispersion, I show that inequality has a significant stabilizing effect on the marriage. Quantitatively, increases in male wage dispersion can roughly explain up to 30% of the fall in the mean separation probability between 1979 and 1990. Several plausible explanations are discussed: changes in spousal labour supplies, female wage inequality, income uncertainty, social capital as well as a hypothesis where inequality renders the option to divorce less attractive by making remarriage more difficult.