income inequality

Equal Is Unfair: America's Misguided Fight Against Income Inequality

by Don Watkins and Yaron Brook  · 28 Mar 2016  · 345pp  · 92,849 words

Equal Is Unfair America’s Misguided Fight against Income Inequality Don Watkins and Yaron Brook St. Martin’s Press New York Begin Reading Table of Contents About the Author Copyright Page Thank you for buying

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on research he conducted with economist Emmanuel Saez beginning in the early 2000s, Piketty uses tax data from the IRS to trace the path of income inequality over the last century. As we can see in Figures 2.1, 2.2, and 2.3, he finds that, after declining during the post

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–World War II era, income inequality has been rising for the last forty years, driven primarily by the top 1 percent of earners. In addition to income inequality, which refers to differences in the amount of money that people earn on a regular

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only are the data sometimes sketchy, but there are many options in deciding which data to use. For instance, if we are trying to assess income inequality, what do we count as income? Do we count pre-tax income or post-tax income? What about government handouts (usually referred to as “transfer

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, the problems are magnified, in part because the historical data are far less reliable. It’s no accident that while there is general agreement that income inequality has been increasing, there is nothing like a consensus when it comes to wealth inequality. Although Piketty shows wealth inequality increasing in the United States

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growth. But here, too, they are swimming against the tide. Most experts agree that, among advanced economies, the United States has the highest levels of income inequality. Yet, by almost every metric—per capita GDP, median standard of living, median disposable income, unemployment—it has also performed better over the last forty

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left-wing group New America, says that the U.S. is a “North American banana republic” no better than some of its impoverished neighbors: “Our income inequality is worse than that of Guyana, Nicaragua, and Venezuela. When it comes to shared prosperity, we keep company with Iran and Yemen.”50 The conclusion

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same goes for their claim that, as Richard Wilkinson and Kate Pickett put it in The Spirit Level, “the relationship between intergenerational social mobility and income inequality is very strong. . . . [C]ountries with bigger income differences tend to have much lower social mobility.”11 In one sense, that would be predictable but

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debate with Yaron, economist James Galbraith placed the blame for rising inequality squarely at the feet of the financial industry. “The major driver of increasing income inequality in the U.S., shown in tax records, is the financial sector, or was the financial sector up through the debacle in 2008. That’s

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justify it—not if you equate justice with economic equality. The Question of Inheritance In recent years, discussions of economic inequality have focused mainly on income inequality. But that’s started to change with Thomas Piketty’s Capital in the Twenty-First Century, which argues that wealth inequality is our biggest long

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, https://www.aeaweb.org/aea/2015conference/program/retrieve.php?pdfid=421 (accessed April 12, 2015). On problems with Piketty’s data on income inequality, see Phil Gramm and Michael Solon, “How to Distort Income Inequality,” Wall Street Journal, November 11, 2014, http://www.wsj.com/articles/phil-gramm-and-michael-solon-how-to-distort

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-income-inequality-1415749856 (accessed April 12, 2015); and Alan Cole, “Income Data Is a Poor Measure of Inequality,” Tax Foundation, August 13, 2014, http://taxfoundation.org/article/

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: Independent Institute, 2012). 44. Stiglitz, The Price of Inequality, p. 3. 45. Ibid., p. 3. 46. Ibid., p. 9. 47. Emmanuel Saez and Thomas Piketty, “Income Inequality in the United States, 1913-1998,” Quarterly Journal of Economics, 118(1), 2003, 1–39 (2013 updates), http://eml.berkeley.edu/~saez/TabFig2013prel.xls (accessed

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, “Whither the Bottom 90 Percent, Thomas Piketty?”; Phil Gramm and Michael Solon, “How to Distort Income Inequality,” Wall Street Journal, November 11, 2014, http://online.wsj.com/articles/phil-gramm-and-michael-solon-how-to-distort-income-inequality-1415749856 (accessed April 12, 2015). IRS data is also sensitive to changes in the tax code

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-are-worthless-1404945590 (accessed June 1, 2015); and Phil Gramm and Michael Solon, “How to Distort Income Inequality,” Wall Street Journal, November 11, 2014, http://www.wsj.com/articles/phil-gramm-and-michael-solon-how-to-distort-income-inequality-1415749856 (accessed June 1, 2015). 63. Richard V. Burkhauser, Jeff Larrimore, and Kosali I. Simon

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Activity, March 19, 2015, http://www.brookings.edu/about/projects/bpea/papers/2015/land-prices-evolution-capitals-share (accessed May 28, 2015); Thomas H. Mayor, “Income Inequality: Piketty and the Neo-Marxist Revival,” Cato Journal, Winter 2015, http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2015/2/cj

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again.” –Lawrence W. Reed, President of the Foundation for Economic Education “Equal Is Unfair demolishes the Left’s myths and demonstrates that the campaign against income inequality is actually an attack on the concept of the ‘land of opportunity’—America’s unique sense of life. As Watkins and Brook show, reason and

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, George Mason University “Arguing the unarguable, Watkins and Brook blow the top off established wisdom on the evil of income inequality and the culpability of the 1%. Today’s one-sided debate on income inequality amounts to envy politics, not logic or fact, as these authors demonstrate in their explosive and entertaining book, Equal

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Is Unfair: America’s Misguided Fight Against Income Inequality. This book shows why the profit motive is noble and shows that government

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intervention in all areas of our lives—not income inequality—is what’s really threatening the American Dream. A must read for those who desire prosperity for more of the world’s people.” –Mallory Factor,

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. www.stmartins.com Cover illustration © Shutterstock Library of Congress Cataloging-in-Publication Data Watkins, Don, 1982– author. Equal is unfair : America’s misguided fight against income inequality / Don Watkins and Yaron Brook. pages cm Includes index. ISBN 978-1-250-08444-6 (hardcover) ISBN 978-1-250-08445-3 (e-book) 1

The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality

by Roland Berger, David Grusky, Tobias Raffel, Geoffrey Samuels and Chris Wimer  · 29 Oct 2010  · 237pp  · 72,716 words

? We are witnessing for the first time in many decades a vigorous public debate in the United States and many European countries as to whether income inequality is approaching unjustifiable levels. The financial crisis has drawn special attention to remuneration at financial firms, as well as other more broadly based increases in

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, and the pendulum may well have swung back toward attitudes favoring strengthened regulations. It is against this background of shifting public and political views about income inequality that the Roland Berger Foundation decided to solicit the opinions of U.S. and European political, business, and labor leaders by partnering with the Stanford

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and presented these interviews in their original form. Ten years ago, we doubt that so many prominent leaders would have agreed to discuss issues of income inequality, and their willingness to do so now is an important signal that times have changed. This new orientation also suggests that issues of

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Inequality? David B. Grusky and Christopher Wimer, Stanford Center for the Study of Poverty and Inequality Should we be troubled by the recent increase in income inequality? Throughout human history, even quite extreme levels of inequality have tended to be accepted as part of the natural order, indeed “just the way things

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recession will make some people less willing to accept or justify inequality R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_1, © Springer-Verlag Berlin Heidelberg 2010 3 4 D.B. Grusky and C. Wimer as the

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sustained reflections about one of the most prominent developments of our time. The backdrop to the economic crisis is, of course, an ongoing increase in income inequality in most, but not all, rich countries. Because our contributors make frequent reference to these trends, it is useful to conclude this introductory chapter with

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4 perhaps the best comparative resource on income and inequality in rich countries, show that most countries have experienced at least a modest rise in income inequality at some 3 The Gini coefficient for income measures the dispersion or spread of income across a society. It equals one if a single person

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Hungary Ireland Italy Japan Luxembourg Mexico Netherlands New Zeeland Norway Portugal Spain Sweden Turkey Great Britain USA OECD-24 OECD-22 Figure 2: Trends in income inequality: Point changes in the Gini coefficient over different time periods (Source: Computations from OECD income distribution questionnaire) These overall inequality trends cannot tell us whether

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certain sectors of the income distribution account for most of the changes when inequality rises or falls. We can better understand why income inequality has risen in cer- 5 Brandolini, A., and T.M. Smeeding, “Patterns of Economic Inequality in Western Democracies: Some Facts on Levels and Trends,” Political

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2006), pp. 21-26. According to Brandolini and Smeeding, the U.S. and the U.K. have experienced the largest and most sustained increases in income inequality, while France experienced virtually no increase. The increases in the Netherlands, Sweden, and Finland were more modest than those in the U.S. and the

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misleading views on how inequality unfolds, it is still important to understand their views precisely because they are so influen6 Piketty, Thomas, and Emmanuel Saez, “Income Inequality in the United States, 1913–1998,” Quarterly Journal of Economics 118 (2003), pp. 1–39. See also A.B. Atkinson and Thomas Piketty, 2010, Top

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of Economics, and Honorary Professor at the Johann Wolfgang Goethe University Frankfurt. ______________________________ R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_2, © Springer-Verlag Berlin Heidelberg 2010 13 14 J. Ackermann Is the level of inequality in Europe

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can see what the solution could be, and so I am not R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_3, © Springer-Verlag Berlin Heidelberg 2010 21 22 B. Collomb uncomfortable even if it’s difficult.

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than decreased. When I was younger, I thought that the world was R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_4, © Springer-Verlag Berlin Heidelberg 2010 39 40 G.G. di Genola actually moving, on average,

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work practices, we have so far managed to avoid the mass unemployment R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_5, © Springer-Verlag Berlin Heidelberg 2010 49 50 J. Hambrecht and poverty seen in the thirties.

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of the Banque de France and the French Government’s Commission to R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_6, © Springer-Verlag Berlin Heidelberg 2010 59 60 M. Lévy Combat Drug Addiction. In 2005, he

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co-founded the Institute for Brain and Spinal Cord Disorders. ______________________________ How would you evaluate income inequality changes over the past two decades? Honestly I don’t know if inequality per se has increased. I know that there have been a very

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, London, and a Fellow of the City and Guilds of London Institute. ______________________________ R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_7, © Springer-Verlag Berlin Heidelberg 2010 69 70 J. Monks How would you judge the amount of

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Chairman of the Innovative Vector Control Consortium. He holds a doctorate in geology and originally joined Shell as an exploration geologist. ______________________________ How do you view income inequality today? You have to begin by defining how the inequality arises, because that makes a big difference. Basically you have three forms of inequality arising

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second kind of inequality is generated by entrepreneurs, owner-operators such as R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_8, © Springer-Verlag Berlin Heidelberg 2010 79 80 S.M. Moody-Stuart Bill Gates or the

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annual list of the 100 most influential people in European capital markets. ______________________________ R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_9, © Springer-Verlag Berlin Heidelberg 2010 93 94 P.N. Rasmussen How would you characterize the level

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CEOs and Chief Executive magazine elected him 2004 CEO of the Year. ______________________________ R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_10, © Springer-Verlag Berlin Heidelberg 2010 103 104 F. Smith How would you characterize the amount of

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keep that capital employed to produce those blue-collar jobs, there’s an incentive to do so. I think that’s at the heart of income inequality, our inability to improve the earnings of the bottom half of the income distribution curve. I personally think it doesn’t make any difference what

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issue of health care is a separate issue, but it is a subset of this, because it has profound implications in terms of income and income inequality. What would you recommend for health care reform? I served for many years on the board of the Mayo Clinic, and we spend billions of

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University Law School, and the University of Toledo’s College of Law. ______________________________ R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_11, © Springer-Verlag Berlin Heidelberg 2010 117 118 J. Sweeney How would you assess the level of

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Even before the onset of the economic crisis, working people in the United States have been left behind by an economy that is fundamentally unbalanced. Income inequality in the United States has grown to levels that we have not seen since before the Depression. The 1% of households received 21.8% of

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the rallying cry in Greece back in the fifth, sixth, seventh, eighth R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_12, © Springer-Verlag Berlin Heidelberg 2010 125 126 W. Weld century BC was gehs anadismos, redistribution of

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of Arts and Sciences and the American Philosophical Society, he is the R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_13, © Springer-Verlag Berlin Heidelberg 2010 133 134 J. Wolfensohn recipient of many national and international medals

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have groups like Al Qaeda, you have all sorts of people with less than positive ideas about what should happen in the world, and so income inequality at that level becomes a dramatic challenge, one which is wholly underestimated by the world. For whatever reason, it is very difficult to get anyone

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performers. It’s difficult to change the shape of that bell curve. R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_14, © Springer-Verlag Berlin Heidelberg 2010 145 146 J. Yang Although our options in the context of

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of employees in India, in China, indeed in lots of overseas markets. We all travel to Kiev all the time! This outsourcing does probably increase income inequality in the U.S. Because you can’t outsource the top 1% of employees, the extremely high wages are still being paid out in the

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, some come from families of means, others from modest backgrounds, some graduated from private universities, others from public institutions. They hold different opinions about rising income inequality, but all believe inequality deserves more thoughtful attention on the political agenda. Rather than summarizing each individual’s opinions, this overview discusses the major concepts

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gap between rich and poor in the United States and many Euro- R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_15, © Springer-Verlag Berlin Heidelberg 2010 155 156 T. Raffel and G. Samuels pean countries.1

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of Deutsche Bank observes, income inequality is judged less dispassionately. The interviewees did not predict how the financial crisis may affect national politics, but some commented on public opinion. Maurice Lévy

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of improving incomes for the bottom half in a globalized world of fast-changing technology and markets. I think that’s at the heart of income inequality, our inability to improve the earnings of the bottom half of the income distribution curve. I personally think it doesn’t make any difference what

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the popular press would make it out to be. (Fred Smith) The Gini coefficient, the most commonly cited index to rate a country’s overall income inequality, is an invisible number. Most people assess inequality by what they see in daily life and what the media shows. Several interviewees disapproved of the

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hosted a major and several minor revolutions is obviously sensitive to inequality, and recent polls indeed report the French public’s growing disapproval of rising income inequality. However, the statistical facts are starkly different. The French Gini coefficient, with minor variations, has been stable over the past two decades. The “bling” effect

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the core of the social compact, may be called into question insofar R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_16, © Springer-Verlag Berlin Heidelberg 2010 177 178 D.B. Grusky and C. Wimer as top

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and worth addressing. A View from the Top 181 What Caused the Rise in Inequality? We turn next to the causes of the takeoff in income inequality that has played out in many (but not all) OECD countries. Although the takeoff has been the focus of much scholarly discussion and research, it

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commentary addressing (a) the effects of the financial crisis on how inequality is viewed and explained, (b) the causes of the long-term increase in income inequality and executive compensation, and (c) the merits of various approaches to reducing inequality. The interviews themselves take on these and other questions in far more

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choose among an array of income statistics, such as those derived from R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_17, © Springer-Verlag Berlin Heidelberg 2010 193 194 R. Berger income, expenditure, gross income, or income net

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countries has increased, though at varying rates and phases. The point is not to dispute a trend over the past couple of decades toward rising income inequality in many countries, but rather to emphasize the dangers of generalizing, trying to find standardized approaches, and the risk of inaccurate analysis due to complex

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market participation rates have increased from 65.8% to 70.2%.4 While these new workers do not alleviate, and indeed may factor in rising income inequality statistics, they are now in the job market. Inequality is not static and they have the potential for advancement they did not previously enjoy. Democracy

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power and relative rates of social mobility.10 However, there is a statistical association (as well as exceptions) between relative rates of social mobility and income inequality, where countries with lower inequality exhibit relatively higher rates of social mobility. As the OECD reports, “In general, the countries with the most equal distributions

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David R. 2006. “Income Mobility: Alive and Well.” Hoover Digest 2006 (1). R. Berger et al., The Inequality Puzzle: European and US Leaders Discuss Rising Income Inequality, DOI 10.1007/978-3-642-15804-9_18, © Springer-Verlag Berlin Heidelberg 2010 211 212 D.B. Grusky and C. Wimer the rationale behind

How Africa Works: Success and Failure on the World’s Last Developmental Frontier

by Joe Studwell  · 6 Dec 2025  · 393pp  · 148,223 words

policy that brought tens of thousands of rural workers into the modern economy, Mauritius was socially inclusive from the start, with low unemployment and declining income inequality. The income equality of Asian societies like Japan, South Korea and Taiwan was replicated, in a rare case, in Africa. Botswana’s diamond rents, channeled

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cattle-owning elite that dominated the economy of a nation of 300,000 people and 550,000 cattle. Historians estimated that the Gini coefficient of income inequality in Botswana – where zero represents perfect equality and one represents perfect inequality – had increased from less than 0.3 in the 1920s to more than

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far more equal society than Botswana because it offered opportunities to almost all people of working age, not least women. Mauritius’s Gini coefficient of income inequality decreased from 0.5 in 1962 to 0.37 in 2000 – on a par with Taiwan, the economy whose development produced the lowest

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income inequality in East Asia. By 2000, Mauritius had almost no poverty by World Bank measures.22 Rising incomes also led to a collapse in the Mauritian

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processing zone (EPZ) and supporting fiscal incentives, the policy did work. Unemployment fell from 20 per cent of the workforce to 3 per cent and income inequality decreased markedly. However, after the establishment of a globally competitive, vertically integrated textiles sector, the government failed to nurture the development of more technologically advanced

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critical early driver of overall growth. Botswana paid close attention to agriculture, but only to the interests of aristocratic large-scale cattle owners, fostering acute income inequality. Mauritius pursued more thoughtful rural policies. Abandoning a plan to break up sugar estates, the government instead taxed large sugar producers aggressively. This raised funds

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of investment. As with smallholder agriculture, the manner in which manufacturing provides incomes to a broad and relatively uneducated swathe of the population dampens down income inequality and raises demand for basic goods that poor countries can produce locally. Export manufacturing also leads to the growth of large firms, whose heft is

The Danger Within Us

by Jeanne Lenzer  · 12 Dec 2017  · 328pp  · 98,127 words

the “better-off Americans had more illness than the better-off English…and nearly as much illness as the worst-off English.” The problem of income inequality is highly complex, and proposing a solution to it is beyond the scope of this book. But there are many social programs that have proved

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, 2011;124(3):224–228. http://www.ncbi.nlm.nih.gov/pubmed/21396505. 48. Kawachi I, Kennedy BP. Health and social cohesion: why care about income inequality? BMJ. 1997;314(7086):1037. 49. Marmot M, Ryff CD, Bumpass LL, Shipley M, Marks NF. Social inequalities in health: next questions and converging evidence

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States, 1960 and 1986. N Engl J Med. 1993;329(2):103–109. 51. Kawachi I, Kennedy BP, Lochner K, Prothrow-Stith D. Social capital, income inequality, and mortality. Am J Public Health. 1997;87(9):1491–1498. 52. Johnston DC. The true cost of national security: the Pentagon and the White

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(8754):1387–1393. http://dx.doi.org/10.1016/0140-6736(91)93068-K. 390. Thompson D. Get rich, live longer: the ultimate consequence of income inequality. The Atlantic 2014. http://www.theatlantic.com/business/archive/2014/04/more-money-more-life-the-depressing-reality-of-inequality-in-america/360895/. 391. McKinlay

Social Justice for the Sensitive Soul: How to Change the World in Quiet Ways

by Dorcas Cheng-Tozun  · 14 May 2023  · 217pp  · 61,247 words

altered the narrative on immigration and US-Mexico relations by forcing us to recognize our shared humanity. The most urgent justice matters of our day—income inequality, racial injustice, gender inequality, refugee resettlement, environmental injustice, ethnic conflict, and more—desperately need creative, compassionate, and empathic individuals who can translate the complex and

The Innovation Paradox: Developing-Country Capabilities and the Unrealized Promise of Technological Catch-Up

by Xavier Cirera and William Francis Maloney  · 14 Jun 2017  · 373pp  · 109,964 words

—at least not enough—in South Africa. Nearly a decade later, South Africa still tops the World Bank’s list of countries with the most income inequality, with more than half the country still living below the national poverty line. By contrast, what we will call pull strategies are different from push

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increased volume of infrastructure stocks and an improved quality of infrastructure services—has a positive impact on long-run growth and a negative impact on income inequality.” They also note that “since most African countries are lagging in terms of infrastructure quantity, quality, and universality of access, the tentative conclusion is that

Lost at Sea: Poverty and Paradise Collide at the Edge of America

by Joe Kloc  · 14 Apr 2025  · 249pp  · 71,929 words

Occupy movement in the fall of 2011, when hundreds of thousands of people in more than six hundred US cities protested the country’s growing income inequality. On nights when I camped in Oscar Grant Plaza in Oakland, watching volunteers struggle to feed hundreds of people sleeping in tents as police surrounded

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the one Daniel had spent time at in San Rafael were cropping up all over, and especially across the Bay Area, where years of growing income inequality had already pushed the region into a houselessness epidemic. By the end of 2020, about 30 percent of all unhoused Americans lived in California. Among

The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War (The Princeton Economic History of the Western World)

by Robert J. Gordon  · 12 Jan 2016  · 1,104pp  · 302,176 words

earn a higher income. Because deprivation stunts growth whereas extreme affluence does not increase height, the average height of a given population declines with greater income inequality. Much of the biometric literature concerns differences across nations, while here we are interested in the evolution of stature in the United States over time

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to customers arriving in their own vehicles were developed in the 1990s, not within the past decade.18 FOOD ISSUES: INEQUALITY AND OBESITY U.S. income inequality was high between the 1890s and 1920s and fell sharply during the Great Depression and World War II. The era between 1945 and 1975 was

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called by Claudia Goldin and Robert Margo “The Great Compression,” after which income inequality began its multidecade increase, which still continues. The growing divide between middle- and upper-class Americans and their poorer fellow citizens has numerous causes and

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consequences, most of them treated in chapter 18. Here our attention turns to the relationship between income inequality, nutrition, and obesity. There is day-and-night difference in the quality and quantity of food consumed at the top and bottom of the income

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and fit America into the most obese of all developed countries. Tragically the increase in obesity has traveled hand in hand with the increase of income inequality and the failure of the United States to conquer poverty. Urban ghettoes, food deserts, and other symptoms of poverty result in the dependence of poor

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, and starvation of public transit. The result is routine traffic congestion, not to mention high energy consumption as distances extend from home to work. Increased income inequality has been joined by increased social inequality as the upper part of the income distribution lives in their large houses ever farther from the poor

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inputs and consequently the educational achievement of students living in rich versus poor school districts. In this way, local school finance begets an increase of income inequality in the next generation, perhaps the most pernicious effect of postwar suburbanization in the United States. Chapter 11 SEE THE USA IN YOUR CHEVROLET OR

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and early twentieth centuries to narrow. Just as the Great Compression coincided with the golden age of economic expansion, so the post-1975 rise of income inequality has taken place in an environment of slower overall economic growth. By some measures the median real wage has barely increased in the past three

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the very top incomes and the average has replaced the Great Compression by the “Great Divergence.” We return to the causes and consequences of rising income inequality in chapter 18. THE FEMININE REVOLUTION: ROSIE THE RIVETER BECOMES A BABY-BOOM HOMEMAKER AND THEN A WHITE-COLLAR PROFESSIONAL The most important change in

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,000 in 1972 to $324,000 in 2007, followed by a modest retreat to $273,000 in 2013. A second source of data related to income inequality comes from the Census Bureau, which provides data on mean and median real household income going back to 1975. Table 18–1 compares the census

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) and for the Median (Census and CBO) Sources: Tables 18–1 and 18–2. CBO from 1979 to 2011, others from 1975 to 2013. If income inequality continues to grow over the next several decades as it has in the past three decades, how much slower will be the growth of median

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rate 0.43 percent per annum slower than average growth. To project future growth in median real income per person, we need to conjecture whether income inequality will continue to widen or whether the trend toward more unequal incomes slows down or stops entirely. The factors that have driven rising inequality are

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). “Controversies about the Rise of American Inequality: A Survey,” NBER Working Paper 13982, May. A shorter version appeared as “Selected Issues in the Rise of Income Inequality,” Brookings Papers on Economic Activity, 2007, no. 2: 191–215. Gordon, Robert J., and Krenn, Robert. (2010). “The End of the Great Depression 1939–41

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Press. Piketty, Thomas. (2014). Capital in the Twenty-First Century. Cambridge, MA/London: Belknap Press of Harvard University Press. Piketty, Thomas, and Emmanuel Saez. (2003). “Income Inequality in the United States, 1913–1998,” Quarterly Journal of Economics 118, no. 1 (February): 1–39. Pinker, Steven. (2011). The Better Angels of Our Nature

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–19. Rattner, Steven. (2014). “The Myth of Industrial Rebound,” The New York Times Sunday Review, January 26, p. 1. Reardon, Sean, and Bischoff, Kendra. (2011). “Income Inequality and Income Segregation,” American Journal of Sociology 116, no. 4 (January): 1092–1153. Reed, Robert C. (1968). Train Wrecks: A Pictorial History of Accidents on

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invented by, 186–87, 197 education: in 1870, 58–59; child labor and, 282–85; college, costs of, 510–14; contribution to productivity of, 15; income inequality and, 624–27; inequality in, 606; in labor quality, 543–44; land-grant colleges for, 311–12; life expectancy and, 485; in medical schools, 226

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–27, 232–33; in nursing schools, 230; preschool education, 647–48; reform of, 644; secondary and higher, 648; as source of income inequality, 620–24; of women, 507; after World War II, 499–500, 520, 521 eight-hour day, 543 Eisenhower, Dwight D., 389, 390 elderly people: hospital

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Great Leap Forward, 554–55 incarceration (imprisonment), 632, 646 income: in 1940, 289; educational attainment and, 514; stature tied to, 83; from work, 278–82 income inequality, 7, 605–8, 612–13; after 1975, 503–4; census data on, 610–11; diet and, 345–47, 371; downward pressure on wages in, 613

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(IR #1), 30–31, 319; Second (IR #2) (See Second Industrial Revolution); Third (IR #3) (See Third Industrial Revolution) industrial safety, 270–73 inequality. See income inequality infant mortality, 50, 61; contaminated milk and, 81; germ theory and, 219; improvements in (1870–1940), 206, 208, 209, 211, 213, 244–45, 322, 463

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Post service by, 137; Rural Free Delivery by, 91, 137, 157–58 poultry, 339 poverty: among elderly people, 516; obesity and, 346–47; See also income inequality power steering and brakes, 382 Pozen, Alexis, 488 Pratt, Gill, 595 preferred provider organizations (PPOs), 491–92, 493 preschool education, 647–48 Preston, Robert, 213

Creating Unequal Futures?: Rethinking Poverty, Inequality and Disadvantage

by Ruth Fincher and Peter Saunders  · 1 Jul 2001  · 267pp  · 79,905 words

36 DAGLISH STREET CURTIN ACT 2605 xi CREATING UNEQUAL FUTURES? TABLES 2.1 Relationship between poverty and social exclusion 2.2 Income inequality in OECD countries, late 1980s 2.3 Income inequality in countries in LIS database, mid-1980s 2.4 Comparison of estimates of poverty in Australia from LIS studies 2.5 Alternative

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. The chapters that follow identify some of these specificities, but do so against a background of more general causes and contexts. The trend towards growing income inequality, documented statistically in considerable detail in research studies, is usually not accompanied by equally detailed explanations of its causes, nor by clear-cut directions about

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the most unequal of developed countries is incorrect. Indeed, if a fully comprehensive framework for measuring income inequality were used, I argue that Australia is likely to remain among the group of developed countries with relatively lower income inequality, although probably not as equal as the Scandinavian countries. In reaching this conclusion, I emphasise

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OECD countries.1 Moreover, different comparative studies continue to show differing trends. For example, recent OECD research (OECD 1998a; Oxley et al. 1997) finds that income inequality and poverty increased in Australia between the middle of the 1970s and the 1980s, but fell between the 1980s and the 1990s. Whatever the reality

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is the Australian literature on poverty and inequality. This literature is extremely large. A second literature is that concerned with international comparisons of poverty and income inequality. This literature is also extremely large, although probably not (yet) as substantial as the Australian poverty literature in aggregate. A third set of studies is

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provide a wealth of empirical information on the extent and composition of poverty in different welfare states, as well as variations in the level of income inequality. In addition, the availability of comparable unit record data means that comparative empirical research on income distribution potentially can be as methodologically sophisticated as national

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34 per cent in the United States and 56 per cent in Australia. Similarly, Atkinson et al. (1995) find large differences in the extent of income inequality in fifteen OECD countries, with the Gini measure of inequality ranging between a low of 0.207 in Finland and a high of 0.341

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from the supposed impact of government intervention on distributional outcomes in advanced societies’ (1991, p. 2). That is, it is distributional outcomes in terms of income inequality and poverty that are most relevant to questions about the effectiveness of different welfare state regimes. Understanding the explanations for these distributional outcomes could also

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social policy reforms modelled on the experiences of other countries. There are a number of possible explanations for the marked differences in the extent of income inequality and poverty between countries noted above. The level of government spending and taxing also varies enormously between countries. Those countries with high levels of spending

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. The Economist (November 5–11, 1994, pp. 19–23) cited similar figures, giving the United States, Australia, New Zealand and Switzerland the highest level of income inequality among thirteen countries, and Sweden and Japan the lowest inequality. Table 2.2 presents the results of a survey by Atkinson (1994), which shows

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income inequality in seventeen OECD countries in the late 1980s. The level of income inequality, as measured by the Gini coefficient, was highest in the United States, with Australia being ranked as the sixth

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r: DP2\BP4401W\MAIN p: (02) 6232 5991 f: (02) 6232 4995 36 DAGLISH STREET CURTIN ACT 2605 57 CREATING UNEQUAL FUTURES? Table 2.2 Income inequality in OECD countries, late 1980s Country Year Gini coefficent Gini as % of mean Rank Australia Belgium Canada Denmark Finland France Germany Ireland Italy Japan Netherlands

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6 14 2 15 17 3 12 4 8 8 8 8 13 7 15 5 1 – Source: Atkinson 1994, pp. 41–2. differences in income inequality in selected countries in the middle of the 1980s, measured using identical analytical procedures for all countries.10 The Gini coefficient is greatest in the

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, Australia and then France. Inequality is lower in Sweden than in any other country, followed by Belgium, Luxembourg and then Germany. A further measure of income inequality is shown in Table 2.3. This is the ratio of the income share of the highest equivalent income quintile to the share of the

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\BP4401W\MAIN p: (02) 6232 5991 f: (02) 6232 4995 36 DAGLISH STREET CURTIN ACT 2605 58 UNDERSTANDING POVERTY AND SOCIAL EXCLUSION Table 2.3 Income inequality in countries in LIS database, mid-1980s Year Gini coefficient Income share ratio a 1985–86 1985 1987 1984 1984 1986 1985 1987 1987 1986

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from falling into poverty.2 As a result, growing earnings inequality at the bottom of the labour market3 was accompanied by a lessening of household income inequality. During a decade when average weekly earnings actually declined in real terms, cash transfers which were targeted at the lowest income households increased by significant

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Oxford University Press, Melbourne Farley, R. 1996 ‘The age of extremes: a revisionist perspective’ Demography vol. 33, no. 4, pp. 417–20 Feldstein, M. 1998 Income Inequality and Poverty NBER Working Paper 6770, National Bureau of Economic Research, Cambridge, Mass http://www.nber.org/papers/w6770 Ferrante, A. and Loh, N. 1996

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employment’ Australian Poverty: Then and Now eds R. Fincher and J. Nieuwenhuysen, Melbourne University Press, Melbourne, pp. 103–26 Harding, A. 1996 ‘Recent trends in income inequality in Australia’ Dialogues on Australia’s Future. In Honour of the Late Ronald Henderson, eds P. Sheehan, B. Grewal and M. Kumnick, Centre for Strategic

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Economic Studies, Victoria University, Melbourne, pp. 283–306 ——1997 The Suffering Middle: Trends in Income Inequality in Australia 1992–1993–1994, NATSEM Discussion Paper, National Centre for Social and Economic Modelling, Canberra Healy, E. 1998 ‘The emerging underclass: evidence from Melbourne

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Øyen, E., Miller, S.M. and Samad, A. eds 1996 Poverty: A Global Review, Scandinavian University Press, Oslo Palme, J. 1989 Models of Pensions and Income Inequality: A Comparative Analysis LIS Working Paper No. 37, CEPS/INSTEAD, Luxembourg ——1990 Pension Rights in Welfare Capitalism: The Development of Old-Age Pensions in 18

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and recession’ Economic Papers. vol. 11, no. 3, pp. 1–22 ——1994 Welfare and Inequality, Cambridge University Press, Melbourne ——1997 ‘Economic adjustment and distributional change: income inequality and poverty in Australia in the 1980s’ Changing Patterns in the Distribution of Economic Welfare. An International Perspective, eds P. Gottschalk, B. Gustafsson & E. Palmer

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CURTIN ACT 2605 244 REFERENCES Evidence from the Luxembourg Income Study, LIS Working Paper No. 79, CEPS/INSTEAD, Luxembourg Smeeding, T. and Coder, J. 1993 Income Inequality in Rich Countries During the 1980s LIS Working Paper No. 88, CEPS/INSTEAD, Luxembourg Society of St Vincent de Paul 1999 The ‘Hidden Faces’ of

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Income Tax Credit Scheme, 215, 220 education, 14, 112–15, 126, 137–8, 141, 156, 177 retention rates in, 113–14, 127 earning inequality see income inequality economic rationalism, 40 Ellwood, D., 53 employment casualisation of, 10, 169, 178, 192, 198, 226 low-paid, 194–5, 205–6, 209, 213–21 passim

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indigenous Australians, 13, 29–30, 77, 86, 129–57, 169, 172, 175, 177 case studies, 131–4 inequality, 1–37 passim; 39, 123, see also income inequality discussion of, 52 in the labour market, 195–206 spatial, 172–8, 185–8 theories of, 44 internal migration see population mobility investment see public

The Great Escape: Health, Wealth, and the Origins of Inequality

by Angus Deaton  · 15 Mar 2013  · 374pp  · 114,660 words

in some parts of the world—but not in others—has led to persistent gaps between countries. Economic growth has been the engine of international income inequality. The Industrial Revolution and the Great Divergence are among the more benign escapes in history. There are many occasions when progress in one country was

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about material living standards. I start with the United States; although America is indeed exceptional and is often extreme, for example in its degree of income inequality, the forces at work apply to other rich countries too. Economic growth brought new prosperity to Americans after World War II, but growth had been

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the same income in each country; not only is there income inequality within countries but, as we shall see in Chapter 6, income inequality is widening in many (but not all) countries. Once within-country income inequality is taken into account, what is happening to income inequality over all the citizens of the world is much less clear

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the world’s population in extreme poverty fell from 84 to 24 percent. This historically unprecedented increase in living standards came with huge increases in income inequality, both between countries and between individuals within countries. The nature of inequality also changed. In the eighteenth century, most inequality was within countries, between the

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benefits at the bottom. Since 2001, tax cuts have once again favored high-income taxpayers. The Congressional Budget Office estimates that, between 1979 and 2007, income inequality (measured by the Gini coefficient, though on a slightly different basis) increased by about a quarter for pretax income and by about a third for

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top of the income and earnings distribution, and it is to them that I turn next. Top Incomes in the United States The study of income inequality was transformed by a 2003 study by two economists, Thomas Piketty, now of the Paris School of Economics, and Emmanuel Saez of the University of

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returns, and so they are fully represented in the income-tax data. Piketty and Saez’s results have changed the way that people think about income inequality, particularly at the top of the distribution. Later studies have looked at comparable data from other countries around the world, so that we can extend

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the OECD countries and is exceeded only by those of China and a handful of countries in Latin America. Indeed, countries with a lot of income inequality are countries where father’s and son’s earnings are closely related;28 the unequal countries, including the United States, are the countries where there

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reason to focus on poverty and not to worry about what is happening at the top. In the words of Martin Feldstein, a Harvard economist, “income inequality is not a problem in need of remedy.”29 There is a lot to be said for the Pareto principle, but, as we shall see

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, it does not imply that rising income inequality is not a problem. But to get there, we need to know more about why the top incomes have risen so rapidly in recent years

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was far from equally shared. The United States is not the only country where inequality has been rising, and although there are important exceptions, rising income inequality is a common recent experience in many countries. What about inequality between countries? Many once-poor countries have seized the “advantage of backwardness”: the opportunity

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China, India, or the tigers. Perhaps surprisingly, and in spite of the achievements of the fast growers, there has been little or no narrowing of income inequality between countries; for every country with a catch-up story there has been a country with a left-behind story. The spread of average incomes

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—we see a remarkable convergence of average incomes, even if the rate of material progress has recently slowed. For these countries, new technology is reducing income inequality, just as it reduced health inequality. The convergence of average incomes across these countries tells us nothing about what was happening within these countries. Indeed

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it really is. More interesting, and less obvious, is that when we look across all countries the spread of average incomes—international country-by-country income inequality—is not falling over time. The boxes for 1950 should be ignored for the moment; there are many countries for which there are no data

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Bloc.) The rapid growth of the successful countries would, by itself, have narrowed the income gaps between countries, but there were enough failures to keep income inequality between countries from falling. Two of the rapidly growing countries are China and Singapore, but the former has more than three hundred times the population

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least made it possible for the entire crowd—the population of the world—to move closer together. When it comes to a big issue like income inequality among all the people of the world, the word possible is a gigantic cop-out. Surely we can do better? The trouble, once again, is

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, and that poor people and their children in India, if not hungry on a daily basis, are among the most malnourished in the world. Global Income Inequality It is often claimed that globalization has made the world more unequal, that while the rich have been presented with new opportunities for getting richer

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-country capitalists to get richer while poor-country capitalists get poorer. With capitalists getting richer and workers getting poorer, income inequality will expand in rich countries and contract in poor countries. (Of course, income inequality is not just about the division between workers and capitalists.) At the beginning of this chapter, I produced data

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where they have always been. Expanding inequality within countries, if it is severe enough, could offset the giant countries’ march to the middle, and cosmopolitan income inequality could be widening. Chapter 5 documented the recent growth in American inequality. Although the United States is only one country, some of the factors that

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evidence that not everyone has benefited from the new opportunities that globalization has brought. While I do not believe that there is any statement about income inequality that is true in every country of the world—except that it is difficult to measure—it is clear that the general trend has been

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toward higher income inequality, especially in recent years. The United States is exceptional, both in its level of inequality and in the size of the recent explosion, particularly at

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the top, but it is certainly not the only country where income inequality is currently increasing. In several of the rich countries, income inequality as measured by the share of the top 1 percent went on falling well into the 1980s, as it had fallen

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inequality is declining in some other large countries, including two traditionally high-inequality countries, Argentina and Brazil. Many rich countries have also seen increases in income inequality in recent years. Most countries saw a reduction in top incomes in the first half of the twentieth century as wars, inflation, and taxes eroded

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, and on whether the high and expanding inequality in the United States is itself unjust, but this is a key part of national discussions about income inequality, whether something ought to be done about it, and if so, just what. The international situation is different. There is no world government to which

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part of the statistical support for international policy in the way that it is for national policy. Indeed, there are no official statistics on global income inequality among individuals, and perhaps the topic is one that should be left to the curiosity of individual scholars. There is much truth in this, but

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. 23. Congressional Budget Office, 2011, Trends in the distribution of household income between 1979 and 2007, Washington, DC. 24. Thomas Piketty and Emmanuel Saez, 2003, “Income inequality in the United States 1913–1998,” Quarterly Journal of Economics 118(1): 1–41. 25. Simon Kuznets, 1953, Shares of upper income groups in income

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Ottawa, http://milescorak.files.wordpress.com/2012/01/inequality-from-generation-to-generation-the-united-states-in-comparison-v3.pdf. 29. Martin S. Feldstein, 1998, “Income inequality and poverty,” National Bureau of Economic Research Working Paper 6770; quote from abstract. 30. Marianne Bertrand and Sendhil Mullainathan, 2001, “Are CEOs rewarded for luck

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(2): 58–63. 18. Branko Milanovic, 2007, Worlds apart: Measuring international and global inequality, Princeton University Press. An important update is Branko Milanovic, 2010, “Global income inequality,” http://site​resources​.world​bank​.org​/INT​POVRES​/Resources​/477227​-1173​1085​74667​/global​_in​equality​_pre​sen​ta​tion​_milanovic​_imf​_2010.pdf. 19

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, 115, 326; foreign aid received by, 277–78, 279, 296; foreign investment in, 277–78; future growth in, 326; Great Leap Forward, 38–39, 326; income inequality in, 258, 259; incomes in, 27, 227–29; life evaluation scores in, 51; life expectancies in, 25–26, 36, 39; one-child policy of, 243

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incomes, 275–76, 313; tied, 278. See also development projects; nongovernmental organizations foreign investment, 277–78, 280 France: foreign aid, 279; foreign aid of, 278; income inequality in, 260 Francis I, Emperor of Austria, 11 freedom: development as, 37–38; expansion of, 37–38; meaning of, 2; as part of wellbeing, 9

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; foreign investment in, 277–78; government regulations, 212–13; health care system of, 123, 124–25; health perceptions in, 122; heights in, 161, 162–64; income inequality in, 258, 259; incomes in, 27; life expectancies in, 25–26, 163; middle class of, 254; population growth in, 240; poverty in, 102, 240, 247

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; health care spending in, 35, 121, 144, 145–47, 195; health care system of, 122–23, 138; heights in, 159; immigrants to, 98–99, 198; income inequality in, 175, 187–89, 188f, 200–206, 204f, 207, 260–61, 327; incomes in, 227–28; life expectancies in, 24–25, 27, 35, 60–62

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