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A Life Cycle Perspective on Changes in Earnings Inequality Among Married Men and Women

Jul 2005
Working Paper
04-036
By  John Pencavel
The connection between the growth in hourly earnings inequality of individuals and changes in family earnings involves a number of issues: the movements in the employment of different family members, the association between changes in the earnings of the husband and those of the wife, and patterns of assortative mating. This paper offers a decomposition of the logarithm of the coefficient of variation in family earnings that distinguishes these issues. Unlike most of the previous research, this paper organizes the data on the dispersion of family earnings not simply over time but also by age. We focus on the impact on family earnings inequality of the growth in the relative employment and relative earnings of wives. Such growth has partly offset the effects on family earnings inequality of the increase in husbands’ earnings inequality.