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Wage increases, transfers, and the socially determined income distribution in the USA

Author

Listed:
  • Lance Taylor

    (Arnhold Professor Emeritus, Department of Economics, The New School for Social Research, New York, NY, USA)

  • Armon Rezai

    (Associate Professor, Vienna University of Economics and Business (WU), Austria, Schrödinger Fellow,and Research Associate, Vienna Institute for International Economic Studies (WIIW), Austria)

  • Rishabh Kumar

    (Department of Economics, The New School for Social Research, New York, NY, USA)

  • Nelson Barbosa

    (Fundação Getúlio Vargas, São Paulo School of Economics, Brazil)

  • Laura Carvalho

    (Department of Economics, University of São Paulo, Brazil)

Abstract

This paper is based on a social accounting matrix (SAM) which incorporates the size distribution of income based on data from the BEA national accounts, the widely discussed 2012 CBO distribution study, and BLS consumer surveys. Sources and uses of incomes are disaggregated by household groups including the top 1 percent. Their importance (including saving rates) differs markedly across households. The SAM reveals two transfer flows exceeding 10 percent of GDP via fiscal (broadly progressive) and financial (regressive) channels. A third major flow over time has been a ten percentage point increase in the GDP share of the top 1 percent. A simulation model is used to illustrate how 'feasible' modifications to tax/transfer programs and increasing low wages cannot offset the historical redistribution toward the well-to-do.

Suggested Citation

  • Lance Taylor & Armon Rezai & Rishabh Kumar & Nelson Barbosa & Laura Carvalho, 2017. "Wage increases, transfers, and the socially determined income distribution in the USA," Review of Keynesian Economics, Edward Elgar Publishing, vol. 5(2), pages 259-275, April.
    • Handle: RePEc:elg:rokejn:v:5:y:2017:i:2:p259-275
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    Citations

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    Cited by:

    1. Lance Taylor, 2014. "The Triumph of the Rentier? Thomas Piketty vs. Luigi Pasinetti and John Maynard Keynes," International Journal of Political Economy, Taylor & Francis Journals, vol. 43(3), pages 4-17, July.
    2. Rezai, Armon & Taylor, Lance & Foley, Duncan, 2018. "Economic Growth, Income Distribution, and Climate Change," Ecological Economics, Elsevier, vol. 146(C), pages 164-172.
    3. Setterfield, Mark & Kim, Yun K., 2016. "Debt servicing, aggregate consumption, and growth," Structural Change and Economic Dynamics, Elsevier, vol. 36(C), pages 22-33.
    4. Rishabh Kumar, 2015. "Thrift, stagnation and wealth distribution in a two class economy with applications to the United States," Working Papers 1506, New School for Social Research, Department of Economics, revised Jul 2015.
    5. Mark Setterfield, 2015. "Time variation in the size of the multiplier: a Kalecki-Harrod approach," Working Papers 1522, New School for Social Research, Department of Economics, revised Jan 2017.
    6. Servaas Storm, 2023. "Lance Taylor (1940–2022): Reconstructing Macroeconomics," Development and Change, International Institute of Social Studies, vol. 54(5), pages 1331-1353, September.
    7. Stefan Ederer & Miriam Rehm, 2021. "Wealth inequality and aggregate demand," Metroeconomica, Wiley Blackwell, vol. 72(2), pages 405-424, May.
    8. Lance Taylor, 2014. "Modeling Distribution and Growth: Replies to Garbellini and Wirkierman, Harcourt, and Nell," International Journal of Political Economy, Taylor & Francis Journals, vol. 43(3), pages 44-54, July.
    9. Lance Taylor & Ozlem Omer & Armon Rezai, 2015. "Wealth Concentration, Income Distribution, and Alternatives for the USA," Working Papers Series 17, Institute for New Economic Thinking.

    More about this item

    Keywords

    wealth distribution; income distribution; SAM;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • B50 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - General

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