Inequality: challenge of the century?

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Presentation transcript:

Inequality: challenge of the century? Olivier G. Giovannoni Bard College ASSA meetings, January 3-5 2015

Outline Facts Questions Top 10 charts on U.S. evidence …and recent research Facts Questions Labor share Why care? Whole economy Causes? … adjusted for top incomes Implications Market labor incomes Policy? Inequality measures Top and bottom incomes Tcherneva-Giovannoni chart Post-tax, post-transfers LIS-Milanovic chart Median incomes Wealth and debt

1. Labor share 80% 75% 60% Source: Giovannoni (2014) based on NIPA and WTID data

2. Inequality measures Source: Giovannoni (2014) based on WTID data

2. Inequality measures Source: Giovannoni (2014) based on WTID data

3. Top and bottom real incomes $300K $31K Source: Giovannoni (2014) based on WTID and BLS data

4. Tcherneva-Giovannoni Source: Tcherneva (2014) extended back to 1917 and decomposed by top income

4. Tcherneva-Giovannoni Source: Tcherneva (2014) extended back to 1917 and decomposed by top income

5. Real Median incomes of people Source: Census Bureau, Historical Table P-2, CPI adjusted

6. Post-tax Source: Branko Milanovic, via Twitter, based on LIS data

7. Wealth

7. WealtH

8. Stock market Wealth

9. debt

10. Household Balance sheets

Questions

Why care about inequality? Because the trends are worrisome To understand the causes: Trade, finance, rents, technology (SBTC), policy shift, or…? How to integrate in our models? To analyze the implications: instability? Policies? Education as a cure? Full employment? Tax and redistribute? Minimum wage? (EPI estimates: $18 min wage to keep pace with productivity, +$18K /yr)

“Inequality and the balance sheet channel of instability” Source: Jared Bernstein blog “on the economy”

Inequality: challenge of the century? Olivier G. Giovannoni James K. Galbraith (moderator) ogiovann@bard.edu Branko Milanovic Stephen Rose Joseph E. Stiglitz