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Changes in the Structure of Family Income Inequality in the United States and Other Industrial Nationa During the 1980s

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  • McKinley L. Blackburn
  • David E. Bloom

Abstract

We examine the detailed structure of family income inequality in the United States, Canada, and Australia at various points during the 1980s. In each of these countries we find that income inequality increased among married couple families and that the increases are closely associated with increases in the inequality of husbands' earnings. However, only in the United States is the increased inequality of husbands' earnings also associated with an increase in education-earnings differentials. In addition, increased earnings inequality is associated with increases in both the variance of wages and the variance of labor supply in the United States and Canada, but only with an increase in the variance of labor supply in Australia. Evidence of an increase in married-couple income inequality is found for France and the United Kingdom, but not for Sweden or the Netherlands. For married couple families in Canada, Sweden, the United Kingdom, and the United States, we find that increased inequality of family income is closely associated with an increased correlation between husbands' and wives' earnings. A more detailed examination of this correlation in Canada and the United States suggests that the increase in this correlation cannot be explained by an increase in the similarity of husbands' and wives' observable labor market characteristics in either country. Rather, it is explained partly by changes in the way those characteristics translate into labor market outcomes and, more important, by changes in the interspousal correlation between unobservable factors that influence labor market outcomes.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4754.

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Date of creation: May 1994
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Publication status: published as Blackburn, McKinley and David E. Bloom. "Changes in the Structure of Family Income Inequality in the United States and Other IndustrializedNations during the 1980s." Research in Labor Economics, Volume 14. Greenwich, Conn. JAI Press, 1995, pp. 141-70
Handle: RePEc:nbr:nberwo:4754

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  1. McKinley L. Blackburn & David E. Bloom, 1993. "The Distribution of Family Income: Measuring and Explaining Changes in the 1980s for Canada and the United States," NBER Chapters, in: Small Differences That Matter: Labor Markets and Income Maintenance in Canada and the United States, pages 233-266 National Bureau of Economic Research, Inc.
  2. Lawrence F. Katz & Gary W. Loveman & David G. Blanchflower, 1993. "A Comparison of Changes in the Structure of Wages," NBER Working Papers 4297, National Bureau of Economic Research, Inc.
  3. Smith, James P, 1979. "The Distribution of Family Earnings," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 163-92, October.
  4. Card, David & Krueger, Alan B, 1992. "Does School Quality Matter? Returns to Education and the Characteristics of Public Schools in the United States," Journal of Political Economy, University of Chicago Press, vol. 100(1), pages 1-40, February.
  5. Alan B. Krueger, 1991. "How Computers Have Changed the Wage Structure: Evidence From Microdata, 1984-1989," NBER Working Papers 3858, National Bureau of Economic Research, Inc.
  6. John Bound & George E. Johnson, 1989. "Changes in the Structure of Wages During the 1980's: An Evaluation of Alternative Explanations," NBER Working Papers 2983, National Bureau of Economic Research, Inc.
  7. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-20, July.
  8. Lawrence F. Katz & Gary W. Loveman & David G. Blanchflower, 1995. "A Comparison of Changes in the Structure of Wages in Four OECD Countries," NBER Chapters, in: Differences and Changes in Wage Structures, pages 25-66 National Bureau of Economic Research, Inc.
  9. Juhn, Chinhui & Murphy, Kevin M & Pierce, Brooks, 1993. "Wage Inequality and the Rise in Returns to Skill," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 410-42, June.
  10. Baumol, William J & Blackman, Sue Anne Batey & Wolff, Edward N, 1985. "Unbalanced Growth Revisited: Asymptotic Stagnancy and New Evidence," American Economic Review, American Economic Association, vol. 75(4), pages 806-17, September.
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  12. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
  13. Katz, Lawrence F. & Revenga, Ana L., 1989. "Changes in the structure of wages: The United States vs Japan," Journal of the Japanese and International Economies, Elsevier, vol. 3(4), pages 522-553, December.
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  15. Richard B. Freeman & Karen Needels, 1991. "Skill Differentials in Canada in an Era of Rising Labor Market Inequality," NBER Working Papers 3827, National Bureau of Economic Research, Inc.
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  17. Blackburn, M.L. & Bloom, D.E., 1991. "The Distribution Of Family Income: Measuring And Explaining Changes In The 1980'S For Canada And The United States," Discussion Papers 1991_05, Columbia University, Department of Economics.
  18. Lehrer, Evelyn & Nerlove, Marc, 1984. "A Life-Cycle Analysis of Family Income Distribution," Economic Inquiry, Western Economic Association International, vol. 22(3), pages 360-74, July.
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Cited by:
  1. Shahina Amin & Julie DaVanzo, 2002. "The Impact of Wives' Earnings Inequality among Married-Couple Households in Malaysia," Working Papers 02-09, RAND Corporation Publications Department.
  2. Immervoll, Herwig & Richardson, Linda, 2011. "Redistribution Policy and Inequality Reduction in OECD Countries: What Has Changed in Two Decades?," IZA Discussion Papers 6030, Institute for the Study of Labor (IZA).
  3. Amin, Shahina & DaVanzo, Julie, 2004. "The impact of wives' earnings on earnings inequality among married-couple households in Malaysia," Journal of Asian Economics, Elsevier, vol. 15(1), pages 49-70, February.

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