The impact of wives' earnings on income inequality: Issues and estimates

We estimate the extent to which rising family income inequality can be expl ained by changes in the earnings of married women. We develop a decompositi on equation that separates single persons from married couples (decompositi on by population group) and, for married couples, distinguishes the impact of wives' earnings from other sources of income (decomposition by income so urce). Despite the rising correlation between husbands' and wives' earnings , changes in wives' earnings do not explain a substantial portion of the in crease in family income inequality. Our results contradict those of some pr evious analyses. The inconsistency of recent estimates can be traced to the use of a variety of conceptually different approaches in the previous lite rature. We clarify these approaches by explicitly distinguishing the concep tual issues, analyzing the empirical components, and providing comprehensiv e estimates.