This paper provides a comprehensive survey on six aspects of rising inequality in the US: changes in labor's share, inequality at the bottom, inequality at the top, labor mobility, inequality in consumption as contrasted to inequality of income, and international differences in inequality, particularly at the top. We conclude that changes in labor's share play no role in rising inequality of labor income. Within the bottom 90 percent as documented by CPS data, movements in the 50-10 ratio are consistent with a role of decreased union density for men and of a decrease in the real minimum wage for women, particularly in 1980-86. There is little evidence on the effects of imports, and an ambiguous literature on immigration which implies a small overall impact on the wages of the average native American, a significant downward effect on high-school dropouts, and potentially a large impact on previous immigrants working in occupations in which immigrants specialize. The paper concludes that data on consumption inequality are too fragile to reach firm conclusions, and offers a perspective on international differences that blends institutional and market-driven explanations.
ASJC Scopus subject areas
- Economics, Econometrics and Finance(all)