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Changing Family Behavior and the U.S. Income Distribution

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  • Mary C. Daly

    (Federal Reserve Bank of San Francisco)

  • Robert G. Valletta

    (Federal Reserve Bank of San Francisco)

Abstract

The trend toward increasing family income inequality in the U.S. over the past several decades is well documented. Among possible explanations for this increase are rising inequality in individual earnings, changes in family labor supply decisions, and changes in family structure and living arrangements. We analyze the contribution of the latter two factors to rising family income inequality during the 1980s using conditionally weighted density estimation, a semiparametric decomposition technique recently pioneered and applied to assess the causes of rising earnings inequality (DiNardo, Fortin, and Lemieux 1996). This technique enables estimation of the impact of the modeled factors on the complete distribution of income. We use data from the March Current Population Surveys for the years 1980 and 1990, which yield family income information for the years 1979 and 1989. The primary effect of both changing family structure and changes in wives' labor force participation was on the midpoint of the family income distribution. The effect of changing family structure on rising inequality was small over this period, primarily because the net change in family structure was small. However, the increase in wives' labor force participation explains about 10 to 25 percent of the increase in family income inequality.

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Bibliographic Info

Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1640.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:1640

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  1. Chinhui Juhn & Kevin M. Murphy, 1996. "Wage Inequality and Family Labor Supply," NBER Working Papers 5459, National Bureau of Economic Research, Inc.
  2. Rebecca M. Blank & David Card, 1993. "Poverty, Income Distribution, and Growth: Are They Still Connected," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 24(2), pages 285-340.
  3. Levy, Frank & Murnane, Richard J, 1992. "U.S. Earnings Levels and Earnings Inequality: A Review of Recent Trends and Proposed Explanations," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1333-81, September.
  4. Lerman, Robert I & Yitzhaki, Shlomo, 1985. "Income Inequality Effects by Income," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 151-56, February.
  5. Juhn, Chinhui, 1992. "Decline of Male Labor Market Participation: The Role of Declining Market Opportunities," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 79-121, February.
  6. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
  7. Burtless, Gary, 1999. "Effects of growing wage disparities and changing family composition on the U.S. income distribution," European Economic Review, Elsevier, vol. 43(4-6), pages 853-865, April.
  8. Lerman, Robert I, 1996. "The Impact of the Changing US Family Structure on Child Poverty and Income Inequality," Economica, London School of Economics and Political Science, vol. 63(250), pages S119-39, Suppl..
  9. Maria Cancian & Deborah Reed, 1998. "Assessing The Effects Of Wives' Earnings On Family Income Inequality," The Review of Economics and Statistics, MIT Press, vol. 80(1), pages 73-79, February.
  10. Shorrocks, Anthony F, 1983. "The Impact of Income Components on the Distribution of Family Incomes," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 311-26, May.
  11. Katharine Bradbury, 1996. "Growing inequality of family incomes: changing families and changing wages," New England Economic Review, Federal Reserve Bank of Boston, issue Jul, pages 55-82.
  12. Delgado, Miguel A & Robinson, Peter M, 1992. " Nonparametric and Semiparametric Methods for Economic Research," Journal of Economic Surveys, Wiley Blackwell, vol. 6(3), pages 201-49.
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