Top Incomes, Rising Inequality, and Welfare
AbstractThis paper develops a general-equilibrium model of skill-biased technological change that approximates the observed shifts in the shares of wage and non-wage income going to the top decile of U.S. households since 1980. Under realistic assumptions, we find that all agents can benefit from the technology change, provided that the observed rise in redistributive transfers over this period is taken into account. We show that the increase in capital’s share of total income and the presence of capital-entrepreneurial skill complementarity are two key features that help support the wages of ordinary workers as the new technology diffuses.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3984.
Date of creation: 2012
Date of revision:
income inequality; skill-biased technological change; capital-skill complementarity; redistribution; welfare;
Other versions of this item:
- Kevin Lansing & Agnieszka Markiewicz, 2012. "Top incomes, rising inequality, and welfare," Working Paper Series 2012-23, Federal Reserve Bank of San Francisco.
- Kevin J. Lansing & Agnieszka Markiewicz, 2012. "Top incomes, rising inequality, and welfare," Working Paper 2012/10, Norges Bank.
- Kevin J. Lansing & Agnieszka Markiewicz, 2012. "Top Incomes, Rising Inequality, and Welfare," Tinbergen Institute Discussion Papers 12-114/IV, Tinbergen Institute.
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
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