Abstract
An increasing number and percentage of families in the United States endeavor to improve family income by placing two adults in the paid work force. This study examines the impact of the second earner on family income for 1,624 married-couple families with children, including 871 one-earner and 753 two-earner families. After-tax income is regressed on one- or two-earner status as well as covariates which confound the income-earner relationship for families of various income levels. The actual after-tax income differential of $7,172 is reduced to $6,076 in the regression analysis. Further, income for each family type is estimated by applying the regression coefficients from one-earner households to the characteristics of two-earner households and the regression coefficients from two-earner households to one-earner household characteristics. Actual incomes for two-earner families are found to be higher than those of one-earner families. However, income differences are reduced from 34% higher actual before-tax income to an estimated 14% lower after-tax income. The findings have important implications for families selecting two earners solely for the purpose of increasing after-tax income.
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This study received funding from the Graduate School Fund at Northern Illinois University. An earlier version of this paper was presented at the Family Economics/Home Management Conference, Indianapolis, IN, June 1987.
Mary Pritchard is an Assistant Professor, Department of Human and Family Resources, Northern Illinois University, DeKalb, IL 60115. She received her Ph.D. from Purdue University and includes family economic well-being, family income and expenditures, and spending patterns of adolescents among her research interests.
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Pritchard, M.E. The value of the second income to two-earner families with children. J Fam Econ Iss 11, 127–141 (1990). https://doi.org/10.1007/BF00987077
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DOI: https://doi.org/10.1007/BF00987077