Family Income Inequality and the Role of Wives Earnings in Mexico: 1988-2010

We study family income inequality in Mexico from 1988 to 2010. Female labor supply increased during this period, especially for married women. The share of wives’ income among married couples grew from 13 percent in 1988 to 23 percent in 2010. However, the correlation of husbands’ and wives’ earnings has been fairly stable with a value close to 0.28, one of the highest correlations recorded across countries. We follow Cancian and Reed’s (1999) methodology in order to analyze whether wives’ income equalizes total family income distribution. We investigate several counterfactuals and conclude that the recent increment in female employment has contributed to a decrease in family income inequality mainly through a rise in wives’ labor supply in poor families.