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The Distribution of Family Earnings

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  • James P. Smith

    (RAND Corporation)

Abstract

This paper investigates the influence of wives' earnings on the distribution of family earnings. In the process some differences in the manner in which family earnings are distributed within racial groups are highlighted. Earnings of wives equalize income distributions in white families but increase dispersion among blacks. Because they have conflicting effects, covariances between spouses in their wage rates and labor supply are isolated. Male and female wage functions are adjusted for sample censoring to fill out the true population variances and covariances in wages across all families. Due to the larger positive correlation in wages of black spouses, black family earnings would be distributed more unequally even if all individuals worked the same amount. Our labor supply analysis indicates that white families attempt to stabilize family earnings with some family members increasing their labor supply in response to a decline in participation of other family members. This compensatory function of wives' earnings is much less prevalent in black families.

Suggested Citation

  • James P. Smith, 2004. "The Distribution of Family Earnings," Labor and Demography 0408010, EconWPA.
  • Handle: RePEc:wpa:wuwpla:0408010
    Note: Type of Document - pdf; pages: 30. Journal of Political Economy, Vol. 87, No. 5, 1979, pp. S163-S192
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    File URL: http://econwpa.repec.org/eps/lab/papers/0408/0408010.pdf
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    Cited by:

    1. Audrey Light, 2004. "Gender differences in the marriage and cohabitation income premium," Demography, Springer;Population Association of America (PAA), vol. 41(2), pages 263-284, May.
    2. John Pencavel, 2006. "A Life Cycle Perspective on Changes in Earnings Inequality among Married Men and Women," The Review of Economics and Statistics, MIT Press, vol. 88(2), pages 232-242, May.
    3. Reuben GRonau, 1981. "Wives' Labor Force Participation, Wage Differentials and Family Income Inequality: The Israeli Experience," NBER Working Papers 0668, National Bureau of Economic Research, Inc.
    4. Junsen Zhang & Pak-Wai Liu, 2003. "Testing Becker’s Prediction on Assortative Mating on Spouses’Wages," Journal of Human Resources, University of Wisconsin Press, vol. 38(1).
    5. Stephen Nord, 1983. "An Interstate Analysis of Changes in Nonwhite and White Family Incomes 1960 to 1970," Eastern Economic Journal, Eastern Economic Association, vol. 9(1), pages 13-21, Jan-Mar.
    6. John M. Nunley & Alan Seals, 2010. "The Effects of Household Income Volatility on Divorce," American Journal of Economics and Sociology, Wiley Blackwell, vol. 69(3), pages 983-1010, July.
    7. Åström, Johanna, 2009. "The Effects of Assortative Mating on Earnings: Human Capital Spillover or Specialization?," HUI Working Papers 34, HUI Research.
    8. Gustman, Alan L. & Steinmeier, Thomas L., 2001. "How effective is redistribution under the social security benefit formula?," Journal of Public Economics, Elsevier, vol. 82(1), pages 1-28, October.
    9. James Smith & Michael Ward, 1980. "Asset Accumulation And Family Size," Demography, Springer;Population Association of America (PAA), vol. 17(3), pages 243-260, August.
    10. Keng, Shao-Hsun & Orazem, Peter F., 2017. "Performance Pay, the Marriage Market and Rising Income Inequality in Taiwan," ISU General Staff Papers 201702050800001023, Iowa State University, Department of Economics.
    11. Robert A. Nakosteen & Olle Westerlund & Michael A. Zimmer, 2004. "Marital Matching and Earnings: Evidence from the Unmarried Population in Sweden," Journal of Human Resources, University of Wisconsin Press, vol. 39(4).
    12. Casey B. Mulligan & Yona Rubinstein, 2004. "Household vs. Personal Accounts of the U.S. Labor Market, 1965-2000," NBER Working Papers 10320, National Bureau of Economic Research, Inc.
    13. Pencavel, John, 2006. "Earnings Inequality and Market Work in Husband-Wife Families," IZA Discussion Papers 2235, Institute for the Study of Labor (IZA).
    14. Morando, Greta, 2014. "Partner ethnicity and ethnic minority socio- economic occupation: evidence from the UK," ISER Working Paper Series 2014-29, Institute for Social and Economic Research.
    15. Nelissen, J.H.M., 1990. "The effect of increased labor force participation of married women on the distribution of family income in the Netherlands," Other publications TiSEM 2d655e83-cbcb-4587-bb0b-9, Tilburg University, School of Economics and Management.
    16. Lehrer, Evelyn L., 2000. "The impact of women's employment on the distribution of earnings among married-couple households: a comparison between 1973 and 1992-1994," The Quarterly Review of Economics and Finance, Elsevier, vol. 40(3), pages 295-301.
    17. McKinley L. Blackburn & David E. Bloom, 1994. "Changes in the Structure of Family Income Inequality in the United States and Other Industrial Nationa During the 1980s," NBER Working Papers 4754, National Bureau of Economic Research, Inc.
    18. Younghwan Song, 2007. "The working spouse penalty/premium and married women’s labor supply," Review of Economics of the Household, Springer, vol. 5(3), pages 279-304, September.
    19. Valerio Filoso, 2010. "Bright and Wealthy: Exploring Assortative Mating," Chapters,in: Institutional and Social Dynamics of Growth and Distribution, chapter 10 Edward Elgar Publishing.
    20. Robert Swidinsky, 1983. "Working Wives, Income Distribution and Poverty," Canadian Public Policy, University of Toronto Press, vol. 9(1), pages 71-80, March.
    21. Åström, Johanna, 2011. "The Effects of Spousal Education on Individual Earnings – A Study of Married Swedish Couples," HUI Working Papers 32, HUI Research.

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    JEL classification:

    • J - Labor and Demographic Economics

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