Recent results on inequality
This new paper is from Robert J. Gordon and it points to some very important results, rooftop results you might say:
The rise in American inequality has been exaggerated both in magnitude
and timing. Commentators lament the large gap between the growth rates
of real median household income and of private sector productivity.
This paper shows that a conceptually consistent measure of this growth
gap over 1979 to 2007 is only one-tenth of the conventional measure.
Further, the timing of the rise of inequality is often misunderstood.
By some measures inequality stopped growing after 2000 and by others
inequality has not grown since 1993. This cessation of inequality’s
secular rise in 2000 is evident from the growth of Census mean vs.
median income, and in the income share of the top one percent of the
income distribution. The income share of the 91st to 95th percentile
has not increased since 1983, and the income ratio of the 90th to 10th
percentile has barely increased since 1986. Further, despite a
transient decline in labor’s income share in 2000-06, by mid-2009
labor’s share had returned virtually to the same value as in 1983,
1991, and 2001.
contributions in the inequality literature have raised questions about
previous research on skill-biased technical change and the managerial
power of CEOs. Directly supporting our theme of prior exaggeration of
the rise of inequality is new research showing that price indexes for
the poor rise more slowly than for the rich, causing most empirical
measures of inequality to overstate the growth of real income of the
rich vs. the poor. Further, as much as two-thirds of the post-1980
increase in the college wage premium disappears when allowance is made
for the faster rise in the cost of living in cities where the college
educated congregate and for the lower quality of housing in those
cities. A continuing tendency for life expectancy to increase faster
among the rich than among the poor reflects the joint impact of
education on both economic and health outcomes, some of which are
driven by the behavioral choices of the less educated. I don't yet see an ungated version. If you go to pp.8-9, you'll see that since 2000 (not including the financial crisis), it is quite possible that inequality has been decreasing, not increasing. That's exactly the period of time when complaints about inequality reached new heights.