Chapter 18 Demographic variables and income inequality

This chapter explores a variety of areas in which demographic variables may play an important role in the distribution of income, introduces a host of demographic issues relating to marriage, fertility, and household living arrangementsusing the household as the unit of analysis. The chapter focuses on the large literature that analyzes the effects on the distribution of income among married couples of marital sorting and the joint labor supply behavior of husbands and wives, changing population composition because of differential fertility, migration, and mortality by income classes, and analyzes the effects of differential fertility across income classes on the distribution of income. Changes in fertility, mortality, migration, marriage, household composition, and age structure will plausibly have a variety of effects on income inequality. A change in the age structure of the population, for example, will in general change the measure of income inequality in the population, even if there is no change within each age group in mean income or age-specific income inequality. The chapter demonstrates that it is possible in many cases to derive instructive analytics about these compositional effects.