We argue that the effect of wives' earnings can be assessed meaningfully only by comparing the observed distribution of income with a reference distribution. The components of the standard decomposition of the Gini coefficient have no implicit reference distribution and therefore should not be interpreted as a measure of the effect of an income source on inequality. We suggest several intuitive counterfactual reference distributions and illustrate their use with 1979 and 1989 U.S. data. We conclude that wives' earnings reduced inequality in that the income distribution would have been less equal in their absence. Alternative measures of the impact have mixed results.

We analyze the impact of recent immigration on the employment and wages of less educated workers during the 1990s, a period of heightened geographic diffusion of immigrants across the nation. We focus on men residing in metropolitan areas, who are between the ages of 25 and 62 and are from the three major racial/ ethnic groups: white non-Hispanic, black nonHispanic, and Latino (hereafter referred to as race groups). Theory predicts that immigration will increase the wages of native workers who are complements to immigrants and decrease the wages of natives who are substitutes. Because immigrants have low education relative to natives, low-educated natives are likely to be substitutes, and high-educated natives are likely to be complements. We find negative effects of recent immigration on the employment, and especially the wages, of low-skilled workers. The wage effects are largest for Latinos, followed by blacks.