Tuesday, November 19, 2013

Roberts on Inequality

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from the article:

No matter how you look at it, the growth rate in family income (as measured by these data at least) changed dramatically around 1973.

. . . What people often forget, especially economists, is that there were huge changes in family structure in the 1960′s and 1970′s. There was a big increase in the divorce rate and a big increase in the number of households headed by women. The increase in the divorce rate was much larger among poor families than it was in rich families. It also grew more dramatically. So as a result, family composition changed dramatically.

. . . Starting around 1971 or 1972, the increase in the proportion of families with children that were headed by women rose draatically. Female-headed households became more numerous generally compared to other types of families. In 1970, about 5% of all families were families with children headed by a woman. By 1991, the proportion had doubled to about 10%. Female-headed households with children tend to have lower income for lots of reasons. That demographic change is going to slow the average measured rate of growth, especially when those families are disproportionately created out of married families that are poorer than the average to begin with.

Source: Russ Roberts, "Inequality in Two Graphs," cafehayek.com, November 19, 2013

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