ASSESSING THE EFFECTS OF WIVES EARNINGS ON FAMILY INCOME INEQUALITY

We argue that the effect of wives' earnings can be assessed meaningful ly only by comparing the observed distribution of income with a refere nce distribution. The components of the standard decomposition of the Gini coefficient have no implicit reference distribution and therefore should not be interpreted as a measure of the effect of an income sou rce on inequality. We suggest several intuitive counterfactual referen ce distributions and illustrate their use with 1979 and 1989 U.S. data . We conclude that wives' earnings reduced inequality in that the inco me distribution would have been less equal in their absence. Alternati ve measures of the impact have mixed results.