Income Inequality, Equality of Opportunity, and Intergenerational Mobility

The summer issue of the Journal of Economic Perspectives will feature a collection of articles on inequality and the top 1%, some of which are now being circulated by the authors.

The paper by Tony Atkinson and his coauthors, “The top 1 percent in international and historical perspective,” is available in this post, and “The Pay of Corporate Executives and Financial Professionals as Evidence of Rents in Top 1 Percent Incomes,” by Josh Bivens and Lawerence Mishel, is available on the Economic Policy Institute website.

Greg Mankiw has also posted a copy of his paper, “Defending the One Percent“, on his blog.

My contribution to the collection is based on the notion that the inequality literature has paid little attention to the intergenerational consequences of increasing top income shares, and it can be read as a counterpoint to Mankiw’s piece, or at least to his claim that inequality of opportunity is not a reason to worry about the top 1%.

Here is the final draft: Income Inequality, Equality of Opportunity, and Intergenerational Mobility. But if you just want a quick read, an excerpt from the conclusion follows. Either way, feedback is—as always—welcomed.

[NOTE added December 10, 2013: the published version of this paper is available from the American Economics Association website for the Summer 2013 issue of the Journal of Economic Perspectives, as is the table of contents for the entire issue.]

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#S17 is today, and reminds us of the price of inequality

The twitter hash tag is #S17, and using it will connect you to all those preparing for the first anniversary of the Occupy Wall Street movement, which of course is today, September 17th.

You will find tweets encouraging your participation: “If you feel that the world is on the right track, stay home. If you know things are bad, Join your local #OWS.”

Others will guide you on how to prepare, be it “Escaping from Zip Ties” or “How to pick your way out of handcuffs” (actually just the Smith and Weston model 100s).

But whatever your level of engagement, there is a message that this anniversary has for us all, a reminder of the real price of inequality.

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My summer reading list was about inequality and opportunity; you might like some of these books

If there is a thread running through the books I read this summer I suppose it is inequality: its causes and consequences; the real life and not so real life—but no less true—experiences of living these causes and experiencing the consequences; and what can—or for that matter can’t—be done about it.

The original ad in the Princeton University newspaper announcing the publication of F. Scott Fitzgerald’s novel. Fitzgerald had been a student at the university. Source: The Daily Princetonian, April 18 1925 .

Inequality in earnings and incomes has been a very hot topic in labour economics for the last two decades, but the relevance of this research and its use in public policy discussion has now become strikingly clear.

My last academic year was dominated by the rise of inequality on the public and public policy radar screen, and I have been so tied up in these discussions that I was carried, as if on a train leaving the station, right along throughout the entire summer.

I re-read a speech President Obama made on the topic. Last December he spoke about a type of inequality that “hurts us all”, and made a link between equality of outcomes and equality of opportunities.

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Understanding inequality and what to do about it

Inequality has been increasing in most countries, in part because top 1% are capturing a higher fraction of all earnings but also for other reasons. I made a presentation to the Occupied Ottawa conference “Take Back Democracy!” on June 2nd, 2012. The presentation explores three issues in search of intelligent conversation, and in order to accomplish something constructive: description, explanation, and prescription.

You can download it as a pdf here: Understanding inequality and what to do about it .

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Inequality and CEO compensation are more important than the CBC suggests

The Canadian Broadcasting Corporation’s senior correspondent Terry Milewski does a disservice in conveying the facts about inequality in his coverage of the now infamous report released earlier this week by the Canadian Centre for Policy Alternatives.

The report graphically documents the income gap between top earners and the rest of the population, the so-called average Joe, by pointing out that by noon on January 3rd—the first working day of the year—the top 100 CEOs in the country made as much as the average Canadian will during the entire year.

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