INEQUALITY

Note: inequality is not the same as poverty

Outline

• Data
  • US Wealth Distribution
  • US Income Distribution
  • Growing Income Inequality
  • World Wealth Distribution
  • World Income Distribution
• Causes of the Growing Income Inequality
• Effects of the Income Inequality
• Policy Options

Data:

United States - Wealth Distribution

Wealth Inequality in America (YouTube 6:23)

 

FROM: https://www.youtube.com/watch?v=QPKKQnijnsM

 

 

FROM: http://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States

 

 

United States - Income Distribution

United States - Growing Income Inequality

 

Census Bureau Data 1967-2001

 

World - Wealth Distribution

Oxfam International: The richest 85 people on Earth have the same amount of wealth as the bottom half of the global population http://www.latimes.com/business/la-fi-income-inequality-20140121,0,3481555.story#axzz2r2RGEtdE

FROM: http://en.wikipedia.org/wiki/Distribution_of_wealth

 

World - Income Distribution

http://guerrantfoundation.org/world-income-distributions-stats/

https://www.globalpolicy.org/component/content/article/218/46595.html

http://www.nationmaster.com/country-info/stats/Economy/Income-distribution/Richest-10%25#-amount

 

 

 

Causes of the Growing Inequality:

• Changes in family structure, includuing the growth of single parent families who tend to be at the lower end of the income distribution, and the growth of two-career high-earner couples near the top of the income disgtribution, account for roughly half of the rise in income inequality across households in recent decades [Principles of Microeconomics, OpenStax.com]

• Earnings have become less equal since the late 1970s, rising gap between the the incomes of high school grads vs. college grads. Why? New technologies and globalization has increased the demand for high-skilled workers. [Principles of Microeconomics, OpenStax.com]

• Unequal distribution of wealth

• Decline of unions

   

Effects of Income Inequality:

• Less satisfaction for society

• Possibly slower economic growth - some studies show that economic growth falls as inequality rises
  • some inequality is necessary to promote growth
  • but too much inequality may undermine growth
    • the wealthy save more and spend less whereas the poor and middle classes spend a higher share of their income
    • inequality may reduce educatin and training

     

• Slower income growth for the middle class and poor - ????

• Rising inequality may allow the rich to have more control ofver the political system - which may make the widening gap hard to reverse

• Social Friction

Policy Options:

• Equality is NOT the goal:
  • the Equality-Efficiency Trade-off. Greater inecome equality resulting from the redistribution of income may come at the cost of there being less income to distribute.

   

• Redistribution: Raise Taxes on the Rich
  • But don't the rich "create jobs"?
    Banned TED Talk: Nick Hanauer "Rich people don't create jobs" YouTube 5:49
  • Make capital gains tax rates similar to income tax rates
  • more progressive income taxes

• Redistribution: Expand the Earned Income Tax Credit

• Improved Educational Opportunities

• Raise the Minimum Wage

• Help working families build assets (low-cost financial services, automatic enrollment in retirement plans with savings credits or federal match