Assortative Matching and the Education Gap

This paper attempts to explain the decrease and reversal of the education gap be-tween males and females. The education decisions of heterogeneous agents are modelled as an assignment game with endogenous types. In the \u85rst stage agents choose their education level and in the second they participate in the labor and marriage markets. Competition among potential matches ensures that the e ¢ cient education levels can al-ways be sustained in equilibrium, but there may be additional equilibria with ine ¢ cient investments. Asymmetries intrinsic to the modelled markets (relative abundance of fe-males and the observed evolution of the wage di¤erential) generate dissimilar education decisions from sets of agents with identical cost distributions. The model theoretically reproduces the behavior of the observed education gap