Is Inequality Growing as American Workers Fall Behind?
AbstractA popular and highly politicized theme today is that US workers are falling behind as their real wages fall and income gets redistributed to the rich. This article looks at some reasons that income inequality could rise, and then explores whether, in fact, workers are losing out. It looks at the suggestion that workers are falling behind relative to the wealthy, and at evidence on whether workers real wages have been falling, or perhaps only manufacturing wages. It also examines whether there is a growing “wealth gap” and whether it is due to falling labor compensation relative to wealth. Finally it examines the hypothesis that relatively inexperienced or unskilled workers are falling behind by fixing a skill level and seeing how real wages are changing over the recent past. The evidence here provides a perspective on why some analysts might believe that there is rising inequality or an emerging wealth gap, or that workers are falling behind, but generally it is not favorable to these pessimistic views of how well workers are doing. While inequality may have risen in recent decades, and there are strong reasons to think that the evidence for this is weak, there is also a strong reason to think that it would be a normal function of an aging population and nothing more. Short of population control or unexplainable and unfair redistribution from the old to the young, there may be nothing that can or should be done to reverse the rise in inequality. Finally the paper argues that there is a wealth gap, but it is due to falling real interest rates and a decline and not due to declining compensation, either absolutely or relative to overall income.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 4116.
Date of creation: 22 Feb 2007
Date of revision:
inequality; wealth gap; wages;
Find related papers by JEL classification:
- E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-07-27 (All new papers)
- NEP-LAB-2007-07-27 (Labour Economics)
- NEP-MAC-2007-07-27 (Macroeconomics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Robert C. Feenstra, 2007. "Globalization and Its Impact on Labour," wiiw Working Papers 44, The Vienna Institute for International Economic Studies, wiiw.
- Ben S. Bernanke, 2007. "The level and distribution of economic well-being," Speech 256, Board of Governors of the Federal Reserve System (U.S.).
- repec:fip:fedgsq:y:2007:i:feb6 is not listed on IDEAS
- Jeffrey Thompson & Timothy M. Smeeding, 2010. "Recent Trends in the Distribution of Income: Labor, Wealth and More Complete Measures of Well Being," Working Papers wp225, Political Economy Research Institute, University of Massachusetts at Amherst.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.