In recent decades, the US wage structure has been transformed by a rising college premium,a narrowing gender gap, and increasing persistent and transitory residual wage dispersion.This paper explores the implications of these changes for cross-sectional inequality in hoursworked, earnings and consumption, and for welfare. The framework for the analysis is anincomplete-markets overlapping-generations model in which individuals choose education andform households, and households choose consumption and intra-family time allocation. Anexplicit production technology underlies equilibrium prices for labor inputs differentiated bygender and education. The model is parameterized using micro data from the PSID, theCPS and the CEX. With the changing wage structure as the only primitive force, the modelcan account for the key trends in cross-sectional US data. We also assess the role played byeducation, labor supply, and saving in providing insurance against shocks, and in exploitingopportunities presented by changes in the relative prices of different types of labor.