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Steven Rattner July 1, 2014 Understanding and Addressing Income Inequality
Transcript
Page 1: Aspen slides

Steven Rattner

July 1, 2014

Understanding and Addressing Income Inequality

Page 2: Aspen slides

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Page 3: Aspen slides

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Piketty’s Important New Book

Page 4: Aspen slides

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Instant Bestseller

Source: NY Times bestsellers list May 11, 2014

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But Weighty and Complex

Page 6: Aspen slides

Trends in Income and Wealthy Inequality

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Page 7: Aspen slides

19.3%

4.1%

18.0%

2.8%

%

Note: Excludes capital gainsSource: Emmanuel Saez, Thomas Piketty

Record Income Inequality in the US

7

Page 8: Aspen slides

Wealth Is More Unequal Than Income

Source: Thomas Piketty

33.8%

17.4%

8

Page 9: Aspen slides

Source: Thomas Piketty

The Super Rich Have Gained the Most

Decomposing the Top 1%

1%-0.5% 0.5%-0.1% 0.1%-0.01%

0.01%

9

Page 10: Aspen slides

US Leads in Income Inequality

Note: As of 2010Source: Thomas Piketty

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Income Inequality: US vs. Europe

Source: Thomas Piketty

14.7%

17.4%

8.8%6.9%

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Page 12: Aspen slides

Wealth Inequality: US vs. Europe

Source: Thomas Piketty

33.8%

28.0%24.4%20.7%

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Page 13: Aspen slides

State of the Middle Class

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Page 14: Aspen slides

US Middle Class Is Losing Its Lead…

Note: As of 2010Source: NY Times, Luxembourg Income Study Analysis

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…And Is No Longer World’s Richest

Note: As of 2010Source: NY Times, Luxembourg Income Study Analysis

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Page 16: Aspen slides

Causes and Consequences

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A Plethora of Causes

Principal causes:

Technology

Globalization

Secondary causes:

Tax policy

Declining unionization

“Winners-take-all” labor markets

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Page 18: Aspen slides

Skills Matter

Source: Bureau of Labor Statistics

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Page 19: Aspen slides

How Globalization Hurts Wages

Source: Bureau of Labor Statistics

Change in Wages by Sector (Jun-09 to May-14)

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Lower Tax Rates, Higher Inequality

Note: Change in top income shares and top marginal tax rates since 1960Source: Emmanuel Saez, Thomas Piketty

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Government Transfers Reduce Inequality

Note: As of 2010Source: CBO, Gary Burtless

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But US Does Less to Redistribute Income

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Note: As of 2011Source: OECD

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Inequality Associated with Immobility

Source: Alan Krueger’s Great Gatsby Curve, Corak (2011), CEA estimates

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But Mobility Has Not Changed Over Time

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Source: “Equality of Opportunity Project” by Raj Chetty , Nathaniel Hendren, Patrick Kline, Emmanuel Saez and Nicholas Turner

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Source: Andrew Berg and Jonathan D. Ostry, IMF

More Inequality May Mean Less Growth

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Source: OECD Income Distribution and Poverty Database and OECD Economic Outlook Database

Or It May Not

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Solutions

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No Silver Bullets

Education / retraining / vocational training

More progressive tax policies

Enhanced social welfare programs

Increased Federal investment spending (R&D, infrastructure etc.)

Fair (but free) trade

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Page 29: Aspen slides

19.3%

4.1%

18.0%

2.8%

%

Note: Excludes capital gainsSource: Emmanuel Saez, Thomas Piketty

In Conclusion

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