Family Matters: The Effect of Demographic Changes in Family Patterns on Rising Income Inequality

The purpose of the proposed study is to investigate the impact changes in family patterns have on the rise in income inequality. Our study focuses on changes in family patterns in Israel during the last decades and their relations to the rise in income inequality across Israeli households. Specifically, the research will focus on changes in women's labor force participation, and changes in educational homogamy and how they affected income inequality. During the last decades income inequality rose dramatically in Israel. At the same time, women improved their educational attainment and labor force participation, similar to what is found in other industrialized countries. Using data from the Israeli census of 1983 and 2008, we present a decomposition of the Theil Index in order to explore the relative "contribution" of  the increase in women's labor force participation and changes in assortative mating.

Our preliminary results indicate that the widening inequality was by and large a result of widening inequalities within the different types of households (based on education). This might indicate that educational assortative mating alone cannot explain the increase in inequality and should be, therefore, studied in tandem with the actual work patterns of women in households with different levels of spouses' education. The period under question witnessed a rise in women's labor force participation (Kimhi, 2012). While most households in Israel are composed of two earners there is still a substantial variation among them in their earner composition, with some having two full-time earners, while in others one spouse (or both) work on a part-time basis, and still others have only one provider. The effect of women's employment on inequality seems of great importance, since their pattern of work is more varied than that of men.