The Impact of Income Inequality on the Family: A test of a thesis

This paper seeks to test whether claims by Wilkinson and Pickett (2010) (W&P) on the negative effects of income inequality on social conditions in rich countries are borne out in the case of the family. The paper examines correlations between 13 family indicators and income inequality across developed countries. It finds that two indicators measuring early family formation correlate with income inequality, but most indicators do not and some do so in a negative direction. The paper then explores a structural precondition which W&P identify as necessary for the income inequality effect to operate, namely, the presence of negative social gradients in outcome variables. It finds that a negative social gradient is present for the family variables already shown to be linked to income inequality, but the small number of variables for which this is so highlights the limited scope of the W&P thesis. The paper also suggests that the growing literature on trends in family patterns over time gives little support to the idea that income inequality is a major influence. The overall conclusion reached is that while the W&P thesis has some validity in the family domain, income inequality on its own does not have a consistent relationship with family behaviour and is not a major contributor to differences between countries or change over time in family patterns.