A recursive model that accounts for the variation in the level and distribution of family income across metropolitan areas is formulated and estimated in this paper. The model draws from both the human capital and the job competition theories of the labor market in the emphasis it places on the industrial structure of the metropolitan area. Then, the impacts of changes in racial, educational, and industrial composition on the level and distribution of income are analyzed. This paper differs most from earlier works in its emphasis on the determination of both the income level and its distribution. It is shown that many of the variables have opposing effects on the dependent variables. It is held that the results can be used, with caution, to speculate about the likely effects of changes in industrial composition and other attributes of an area and its labor force on the level and distribution of income. The results are seen to establish a case for further analysis of the relationship between income levels and the degree of inequality across metropolitan areas. (Author/AM)