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Working Paper: The Upward Redistribution of Income: Are Rents the Story?

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  • Dean Baker

Abstract

In the years since 1980, there has been a well-documented upward redistribution of income. While there are some differences by methodology and the precise years chosen, the top one percent of households have seen their income share roughly double from 10 percent in 1980 to 20 percent in the second decade of the 21st century. As a result of this upward redistribution, most workers have seen little improvement in living standards from the productivity gains over this period. This paper argues that the bulk of this upward redistribution comes from the growth of rents in the economy in four major areas: patent and copyright protection, the financial sector, the pay of CEOs and other top executives, and protectionist measures that have boosted the pay of doctors and other highly educated professionals. The argument on rents is important because, if correct, it means that there is nothing intrinsic to capitalism that led to this rapid rise in inequality, as for example argued by Thomas Piketty.

Suggested Citation

  • Dean Baker, 2015. "Working Paper: The Upward Redistribution of Income: Are Rents the Story?," CEPR Reports and Issue Briefs 2015-26, Center for Economic and Policy Research (CEPR).
  • Handle: RePEc:epo:papers:2015-26
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    File URL: http://cepr.net/documents/working-paper-upward-distribution-income-rents.pdf
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    References listed on IDEAS

    as
    1. Jon Bakija & Adam Cole & Bradley Heim, 2008. "Jobs and Income Growth of Top Earners and the Causes of Changing Income Inequality: Evidence from U.S. Tax Return Data," Department of Economics Working Papers 2010-22, Department of Economics, Williams College, revised Jan 2012.
    2. Dean Baker & Robert Pollin & Travis McArthur & Matt Sherman, 2009. "The Potential Revenue from Financial Transactions Taxes," CEPR Reports and Issue Briefs 2009-50, Center for Economic and Policy Research (CEPR).
    3. Lanjouw, Jean O & Pakes, Ariel & Putnam, Jonathan, 1998. "How to Count Patents and Value Intellectual Property: The Uses of Patent Renewal and Application Data," Journal of Industrial Economics, Wiley Blackwell, vol. 46(4), pages 405-432, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    rents; patents; wall street; financial transactions tax; intellectual property; CEO pay;

    JEL classification:

    • P - Economic Systems
    • P1 - Economic Systems - - Capitalist Systems
    • G - Financial Economics
    • G3 - Financial Economics - - Corporate Finance and Governance

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