Family Income Distribution: Explanation and Policy Evaluation (1979)

Most people live in families, and their standard of living depends upon the family’s income rather than on their own. So, if one is interested in income distribution from a welfare motivation one should study the distribution of family rather than individual income. Yet this has been studied surprisingly little. One obvious issue is: Can family income be more easily explained than individual income? The question is interesting in itself, and it has also been argued by Jencks et al. (1972) that it has policy relevance. For, they argue, if schooling explains little of the variance of income, then eliminating differences in schooling will have little impact on inequality. The argument is correct but of little relevance to policy since nobody has ever proposed eliminating all differences in schooling. So we prefer to think of the business of explanation (in section I of the paper) as motivated by positive concerns. If one wants to think about policy the questions have to be more specifically formulated, and in section II we attempt to show how the effects of policy changes on the distribution of family income can be analyzed most fruitfully.