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Income Inequality, Cause and Cure

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  • B. N. Kausik

Abstract

We argue that the recent growth in income inequality is driven by disparate growth in investment income rather than by disparate growth in wages. Specifically, we present evidence that real wages are flat across a range of professions, doctors, software engineers, auto mechanics and cashiers, while stock ownership favors higher education and income levels. Artificial Intelligence and automation allocate an increased share of job tasks towards capital and away from labor. The rewards of automation accrue to capital, and are reflected in the growth of the stock market with several companies now valued in the trillions. We propose a Deferred Investment Payroll plan to enable all workers to participate in the rewards of automation and analyze the performance of such a plan. JEL Classification: J31, J33, O33

Suggested Citation

  • B. N. Kausik, 2022. "Income Inequality, Cause and Cure," Papers 2201.10726, arXiv.org, revised Feb 2022.
    • Handle: RePEc:arx:papers:2201.10726
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    References listed on IDEAS

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    1. David Autor & David Dorn & Lawrence F Katz & Christina Patterson & John Van Reenen, 2020. "The Fall of the Labor Share and the Rise of Superstar Firms [“Automation and New Tasks: How Technology Displaces and Reinstates Labor”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 645-709.
    2. Brent Neiman, 2014. "The Global Decline of the Labor Share," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(1), pages 61-103.
    3. Mai Dao & Ms. Mitali Das & Zsoka Koczan & Weicheng Lian, 2017. "Why Is Labor Receiving a Smaller Share of Global Income? Theory and Empirical Evidence," IMF Working Papers 2017/169, International Monetary Fund.
    4. repec:oup:qjecon:v:129:y:2013:i:1:p:61-103 is not listed on IDEAS
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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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