Post on 13-Apr-2017
transcript
The Rise in Economic Inequality: Causes and Cures
Greg MankiwApril 2016
Today’s Surprising Politics
“an economy and a political system that has been rigged by Wall Street”
Facts
GDP Growth over Past 10 Years
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6%
Source: Goldin and Katz from census data.
The One Percent(Threshold is $423,000 in 2014)
Top 0.01 % Income Share(Threshold is about $9,750,000 in 2014)
Source: Piketty and Saez.
An Aside on Mobility
• If your income is at the 99th percentile, at what percentile should you expect your children to be?
• Nature or nurture?
Source: Chetty et al., 2014.
Hypotheses
Why Slow Growth?• The future ain’t what it used to be
Why Rising Inequality?
• A tug of war: Education versus Technology
A Slowdown in Educational Attainment
Source: Goldin and Katz.
The Rising Return to Education
Source: David H Autor, Science 2014;344:843-851
Other Reasons for Rising Inequality
• Globalization
• Superstars
• Women’s movement & assortative mating
Trends in the correlation between husbands' and wives' earnings
Source: Earnings Inequality and the Changing Association between Spouses’ Earnings, Christine R. Schwartz, American Journal of Sociology , Vol. 115, No. 5 (March 2010), pp. 1524-1557.
Policies
What can we do?
• Many root causes are nearly impossible to alter• Except:
• Treating the symptoms
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Optimal redistribution?
• Normative, not positive.
• The Utilitarianism of Jeremy Bentham (1748-1832)
• The role of diminishing marginal utility
Questioning Utilitarianism
• Is utility interpersonally comparable?
• What about differences in tastes?
• Revolting(?) implications: Trolley problems
• “Tagging” and the optimal taxation of height
One final thought• Americans living at
the poverty line are poorer than 85% of their fellow citizens.
• But they are richer than 85% of people in the world.
Thank you!