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Rising Inequality in an Era of Austerity: The Case of the US

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  • Mark D. Partridge
  • Amanda L. Weinstein

Abstract

US inequality has rapidly increased since the early 1970s. For advanced economies, inequality is linked to stronger incentives that enhance growth, education, innovation and entrepreneurship. However, the rise in US inequality is concentrated in the top 1%. Hence it is increasingly possible that economic rewards may be too uncertain to promote effort, suggesting the US has crossed a tipping point in which inequality reduces growth. Other costs include more social and political instability, making inequality the next potential “crisis” facing America. This study first examines trends in inequality and then reviews arguments that suggest that it is both good and bad for growth in America's cities. We then provide evidence that there has been a reversal in the effects of inequality after 2000 with it now being associated with less income and job growth in US metropolitan areas. We conclude by arguing that no general solution is possible without significant political reforms that equalize political influence.

Suggested Citation

  • Mark D. Partridge & Amanda L. Weinstein, 2013. "Rising Inequality in an Era of Austerity: The Case of the US," European Planning Studies, Taylor & Francis Journals, vol. 21(3), pages 388-410, March.
    • Handle: RePEc:taf:eurpls:v:21:y:2013:i:3:p:388-410
    DOI: 10.1080/09654313.2012.716247
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    References listed on IDEAS

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    1. Andrew G. Berg & Jonathan D. Ostry, 2017. "Inequality and Unsustainable Growth: Two Sides of the Same Coin?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 65(4), pages 792-815, November.
    2. Andrew G. Berg & Jonathan D. Ostry, 2017. "Inequality and Unsustainable Growth: Two Sides of the Same Coin?," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 65(4), pages 792-815, November.
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    Cited by:

    1. Sébastien Breau & Dieter F. Kogler & Kenyon C. Bolton, 2014. "On the Relationship between Innovation and Wage Inequality: New Evidence from Canadian Cities," Economic Geography, Clark University, vol. 90(4), pages 351-373, October.
    2. Neil Lee & Paul Sissons, 2016. "Inclusive growth? The relationship between economic growth and poverty in British cities," Environment and Planning A, , vol. 48(11), pages 2317-2339, November.
    3. Goetz, Stephen & Partridge, Mark & Stephens, Heather, 2017. "The Economic Status of Rural America in the Trump Era," MPRA Paper 77830, University Library of Munich, Germany.
    4. Seung‐hun Chung & Mark D. Partridge, 2021. "De facto power of elites and regional growth," Papers in Regional Science, Wiley Blackwell, vol. 100(1), pages 169-202, February.

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