How Trends in Earnings Instability of Couples: How Important is Marital Sorting?

Using the matched March Current Population Surveys for 1968-2008 and 19782006 Social Security earnings data matched to several Survey of Income and Program Participation panels, this paper examines the evolution of variability in year-to-year changes in individual and couples' earnings. We find couples' earnings instability remained stable over time due to offsetting trends in men's and women's earnings instability. While men's earnings instability increased, particularly during the 1970s, women's earnings instability declined dramatically. We find some evidence that the correlation of spouses' earnings changes became more positively related over time, but we generally find these correlations to be small. Comparing actual couples to simulated couples who are randomly matched, we find similar trends in earnings instability, suggesting that marital coordination of work and marital sorting are relatively unimportant for instability measures.