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When a Rising Tide Sinks Most Boats: Trends in US Income Inequality

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  • Pavlina R. Tcherneva

Abstract

In the postwar period, with every subsequent expansion, a smaller and smaller share of the gains in income growth have gone to the bottom 90 percent of families. Worse, in the latest expansion, while the economy has grown and average real income has recovered from its 2008 lows, all of the growth has gone to the wealthiest 10 percent of families, and the income of the bottom 90 percent has fallen. Most Americans have not felt that they have been part of the expansion. We have reached a situation where a rising tide sinks most boats. This policy note provides a broader overview of the increasingly unequal distribution of income growth during expansions, examines some of the changes that occurred from 2012 to 2013, and identifies a disturbing business cycle trend. It also suggests that policy must go beyond the tax system if we are serious about reversing the drastic worsening of income inequality.

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  • Pavlina R. Tcherneva, 2015. "When a Rising Tide Sinks Most Boats: Trends in US Income Inequality," Economics Policy Note Archive 15-4, Levy Economics Institute.
  • Handle: RePEc:lev:levypn:15-4
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    1. Pavlina R. Tcherneva, 2014. "Growth for Whom?," Economics One-Pager Archive op_47, Levy Economics Institute.
    2. Edward Wolff & Ajit Zacharias, 2009. "Household wealth and the measurement of economic well-being in the United States," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 7(2), pages 83-115, June.
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