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Family spending power

Jamie Carson ()

Microeconomics from University Library of Munich, Germany

Abstract: Families with two or more adults have unadjusted incomes above the overall average because they have more potential earners. On the other hand, unattached individuals and lone parents have after-tax income averages just over half the overall average. Adjusting incomes to account for family size and composition-using an 'equivalence scale'- changes the picture. Based on the adjusted figures, the average family had the equivalent spending power of an unattached individual with $26,900 in after-tax income in 1999. Adjusted incomes fall into a narrower range, so the gap between the highest and lowest 20% falls from $8 (unadjusted) to $5 for every $1. This smaller gap indicates a tighter distribution when incomes are adjusted for family size. Many demographic trends contributed to changes in the size and type of families between 1980 and 1999. The family with two parents and children saw a decline, while other forms of household organization increased. The average family size in 1999 was 10% smaller than in 1980.

Keywords: adjusted family income; inequality; after-tax income (search for similar items in EconPapers)
JEL-codes: D1 D2 D3 D4 (search for similar items in EconPapers)
Pages: 11 pages
Date: 2005-08-09
Note: Type of Document - pdf; pages: 11. Adjusting family income for family size and composition. Cited in Palmetta and Macredie -- Statistics Canada 2005.
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Handle: RePEc:wpa:wuwpmi:0508006