ECONOMIC

Farm wages and farm income received in kind (such as food and lodging)and medicare payments are generally concentrated among the poor, andthey reduce income inequality. The inclusion of imputed interest frombanks and insurance companies does not significantly change inequality.When personal income taxes and payroll taxes are deducted from moneyincome plus imputed income, the dispersion of income declines.Because of the extreme difficulties involved, no effort was made to computethe distribution of capital gains or losses among families. Nor was aneffort made to remove the effect of transitory influences on income in anyone year. Capital gains and losses, however, tend to be concentrated amongupper-income families, and for years of net capital gains their inclusion inthe income concept would clearly increase family income inequality. Severalstudies suggest that if accrued capital gains are included in income a veryhigh proportion of families earn incomes falling in ranges in which the taxsystem is essentially proportional.The huge growth in Federal food, medical, and other in-kind subsidiesto the poor during the past 10 years would certainly reduce inequality ifthey were included in the income measures. In addition, families differ intheir use of government-subsidized goods and services, such as manpowertraining programs, public schools, national parks, and roads, but the incidenceof benefits by income level is not known.Family Composition and Work in the Labor MarketFamilies vary considerably in the hours they work in the labor marketto produce measured money income. The difficulty of imputing a value towork done at home has already been noted. The fact that a wife does notwork in the market can be taken to mean that she considers her productivityat home to be of more value than what she could earn in the market. Knowingthat she does not work in the labor market is not sufficient, however, todetermine the money value of the wife's work at home.Table 36 indicates roughly how families at three levels of income differin their composition and work in the labor market, and how this has changed.In both 1952 and 1972, families in the lowest fifth were much more likelyto be headed by a woman or by a person either less than 25 years of age orolder than 65 years. Partly because of these differences in age and sex, theheads of lower-income families are less likely to participate in the labormarket, and so are the other family members.Such families consequently depend more on income from sources otherthan earnings, such as social security, other retirement incomes, and publicassistance. By contrast, upper-income families generally have many earnersper family and are more likely to include a wife who works. Presumablythese families have less time for work at home, and they must buy with theirearnings some of the services that would otherwise be produced at home.144