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Sources of Inequality: Measuring the Contributions of Income Sources to Rising Family Income Inequality

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  • Deborah Reed
  • Maria Cancian

Abstract

We develop a simulation method for measuring the impact of changes in the distributions of the main income sources on growth in family income inequality. We simulate the entire distribution of family income under the counterfactual, “What if the distribution of each source had not changed?” The simulation method allows us to evaluate the impact of changes at any point in the distribution as well as with multiple measures of inequality. We incorporate married‐couple and single‐person families, appropriately accounting for changes in the proportion married. We apply the simulation method to investigate the impact of changes in male earnings, female earnings, and capital income on the distribution of family income in the United States between 1969 and 1999. We find that changes in the distribution of male earnings account for more of the growth in family income inequality than do changes in any other source of income. Changes in the distribution of female earnings have reduced family income inequality.

Suggested Citation

  • Deborah Reed & Maria Cancian, 2001. "Sources of Inequality: Measuring the Contributions of Income Sources to Rising Family Income Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 47(3), pages 321-333, September.
    • Handle: RePEc:bla:revinw:v:47:y:2001:i:3:p:321-333
    DOI: 10.1111/1475-4991.00020
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