Household structure, its changes and the distribution of income. A comparison across welfare regimes

This comparative article contributes to the still open debate on theconsequences of changes in households for income inequality, and proposes todistinguish the household’s role in terms of its capacity to stratify and redistributeeconomic resources. The empirical contribution of the article is threefold. First, itanalyses the extent to which demographic and economic characteristics of householdsstratify income inequality levels over time in different European countries (Denmark,Germany, Italy, and the United Kingdom) and in the US. Second, it studies howinstitutions – market, family, and state – redistribute income and shape the stratificationproduced by household’s characteristics. Third, it assesses to which extent changes inthe composition of households and their members’ economic behavior account fortrends in inequality. Analyses are based on the subgroups decomposition of the Theilindex and its counterfactuals using Luxembourg Income Study data. Results showthat that household types can be considered as a relevant dimension of inequalityclustering, similarly to other classical lines of stratification. The household, however,also contributes to redistribute income, as well as the state does. Institutions play arelevant role. Indeed, while changes in households are strictly associated with changesin market income inequality, their impact is limited on family income and almostabsent on disposable income.