Third, to what extent do wives’ earnings, taxes and transfers reduce the differences in instability that are observed between couples in the bottom of the earnings distribution and those in the top of the earnings distribution? [...] Similarly, it cannot be fully attributed to the cyclical instability of employment: approximately half of the increase in earnings instability is due to the increase in the variance of wages. [...] In Figure 1, an increase in the distance between the age-earnings profiles of high-skilled families and those of low-skilled families will cause an increase in the permanent component (i.e., an increase in inequality) while an increase in the fluctuations of earnings around a given age-earnings profile (e.g., an increase in the distance AB) will cause an increase in the transitory component (i.e., [...] It measures the average deviation, in percentage terms, of actual family earnings from expected family earnings during the observation period, i.e., the proportion of expected family earnings represented by the distance AB in Figure 1.12 To put the mean absolute deviation and σ2 w on a comparable scale, we also compute the square root of. [...] While disentangling these effects is beyond the scope of the paper, one simple way of assessing the impact of wives’ earnings on instability is to compare the instability of husbands’ earnings to the instability of earnings experienced by couples.