Trickle Down or Transfers? Postwar Determinants of Family Income Inequality

The expansion of social welfare has been promoted as one means of equalizing the distribution of economic well-being. Macroeconomic expansion has been touted as an alternative strategy for improving the lot of the poor. Focusing on the postwar era, this paper provides an empirical assessment of these two competing theories of income redistribution. For female-headed families and unrelated men and women, the growth of public transfers is seen to be the major force behind a reduction in income disparities. Only husband-wife families and men living apart from kin seem to have experienced any distributional impact of business cycles.