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American Economic Review: Vol. 91 No. 4 (September 2001)

AER Volume. 91, Issue 4 | Previous ArticleNext Article

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Rising U.S. Earnings Inequality and Family Labor Supply: The Covariance Structure of Intrafamily Earnings

Article Citation

Hyslop, Dean R. 2001. "Rising U.S. Earnings Inequality and Family Labor Supply: The Covariance Structure of Intrafamily Earnings." American Economic Review, 91(4): 755-777.

DOI: 10.1257/aer.91.4.755

Abstract

This paper studies the labor supply contributions to individual and family earnings inequality during the period of rising wage inequality in the early 1980's. Working couples have positively correlated labor market outcomes, which are almost entirely attributable to permanent factors. An intertemporal family labor supply model with this feature is used to estimate labor supply elasticities for husbands of 0.05, and wives of 0.40. This implies that labor supply explains little of the rising annual earnings inequality for married men, but over 20 percent of the rise in family inequality and 50 percent of the modest rise in female inequality.

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Authors

Hyslop, Dean R. (UCLA)

JEL Classifications

D31: Personal Income, Wealth, and Their Distributions
J22: Time Allocation and Labor Supply
J12: Marriage; Marital Dissolution; Family Structure; Domestic Abuse
J31: Wage Level and Structure; Wage Differentials