(Preliminary post – am planning to write this all up more digestibly in a future post)
Free markets and income inequality
Capital in the 21st Century (Piketty)
When the rate of return on capital is greater than the rate of economic growth (as tends to occur in a free market given time), this leads to a concentration of wealth.
Capitalism and inequality: The negative consequences for humanity (Stevenson)
Inequalities are the inevitable result of capitalism, and we should abolish private property.
Envisioning Real Utopias (Wright)
Capitalism causes inequality through profit-seeking behavior and encouragement of innovation in technology.
How Privatization Increases Inequality (In the Public Interest)
Privatization of public goods causes inequality and inefficiency.
Income inequality and privatisation: a multilevel analysis comparing prefectural size of private sectors in Western China (Bakkeli)
More privatization corresponds to higher income inequality and lower individual outcome.
Economic Freedom, Income Inequality and Life Satisfaction in OECD Countries (Graafland, Lous)
Economic freedom causes higher income per capita, higher inequality, and overall lower happiness.
Testing Piketty’s Hypothesis on the Drivers of Income Inequality: Evidence from Panel VARs with Heterogeneous Dynamics (Góes)
Piketty’s r – g hypothesis is wrong; the effect of r > g is not wealth concentration, but in fact mild wealth dispersion.
Economic Freedom and the Trade-off between Inequality and Growth (Scully)
Economic freedom overall reduces inequality, despite that economic growth increases inequality.
A Dynamic Analysis of Economic Freedom and Income Inequality in the 50 U.S. States: Empirical Evidence of a Parabolic Relationship (Bennett, Vedder)
Increases in economic freedom are associated with lower income inequality, and larger government is associated with greater inequality (with the exception of progressive taxation)
Economic freedom and equality: Friends or foes? (Berggren)
More economic freedom is associated with less inequality, because of trade liberalization and economic growth.
Economic Freedom And Income Inequality Revisited: Evidence From A Panel Error Correction Model (Apergis, Dincer, Payne)
Economic freedom reduces inequality in both the short and long run, and inequality causes less economic freedom.
Income inequality and economic freedom in the U.S. states (Ashby, Sobel)
More economic freedom causes larger per capita income, higher rates of economic growth, and less relative income inequality.
On the ambiguous economic freedom–inequality relationship (Bennett, Nikolaev)
The relationship between economic freedom and inequality is ambiguous – it depends on how you choose your freedom and inequality measures.
Income inequality in the US
The Geography of Trade and Technology Shocks in the United States (Autor, Dorn, Hanson)
Two biggest causes of growing inequality are technology and trade, which are geographically separate in their effects.
Why are American Workers getting Poorer? China, Trade and Offshoring (Ebenstein, Harrison, McMillan)
Offshoring to China has led to US wage declines, but trade with China is much more important in explaining wage declines.
China Trade, Outsourcing and Jobs (Kimball, Scott)
China is a currency manipulator, encouraging a huge trade imbalance and hurting US workers.
The China Syndrome: Local Labor Market Effects of Import Competition in the United States (Autor, Dorn, Hanson)
China imports increase unemployment, lower labor force participation, and reduce wages in the US.
Rising Income Inequality: Technology, or Trade and Financial Globalization? (Jaumotte, Lall, Papageorgiou)
Technological progress is the primary cause of the rise of inequality in the last 2 decades, and increased globalization has had a minor impact.
World Economic Forum Outlook, April 2017: Gaining Momentum? (International Monetary Fund)
Decrease in bottom wages in advanced economies is driven mostly by technology and also by globalization.
It’s the Market: The Broad-Based Rise in the Return to Top Talent (Kaplan, Rauh)
Incomes at the top are driven by technological change in information and communications that increase the relative productivity of talented individuals through audience magnification.
Wage Inequality: A Story of Policy Choices (Mishel, Scmitt, Shierholz)
Income inequality is the result of erosion of the minimum wage value, decreased union power, industrial deregulation, traid policy, failure to use fiscal spending to stimulate the economy, bad monetary policy by the Fed, and rent-seeking behaviors from CEOs.
Controversies about the Rise of American Inequality: A Survey (Gordon, Dew-Becker)
Rising inequality is due to a low minimum wage, the decline in unionization, audience magnification, generous stock options, and unregulated corporate wage practices, not imports, immigration, or a lower labor share of income.
The Top 1 Percent in International and Historical Perspective (Alvaredo, Atkinson, Piketty, Saez)
Tax policy, decreased labor bargaining ability, and increased capital income explain the growing income share at the very top, not technology.
Declining Labor and Capital Shares (Barkai)
Capital shares have declined faster than labor shares in the last 30 years, and the decline of labor shares is due entirely to an increase in markups, which decreases output and consumer welfare.
The Pay of Corporate Executives and Financial Professionals as Evidence of Rents in Top 1 Percent Incomes (Bivens, Mishel)
CEO pay is driven by rent-seeking behavior.
Evidence for the Effects of Mergers on Market Power and Efficiency (Blonigen, Pierce)
Mergers in manufacturing from 1997 to 2007 haven’t significantly increased productivity or efficiency, but have increased markups.
Skills, education, and the rise of earnings inequality among the “other 99 percent” (Autor)
Income inequality is mostly due to an increasing skill premium, but is also due to a decline in the minimum wage value, automation, international trade, de-unionization, and regressive taxation.
The long-run determinants of inequality: What can we learn from top income data? (Roine, Vlachos, Waldenström)
High growth benefits top income earners, tax progressiveness reduces top income shares, and trade openness doesn’t really do anything.
Why Hasn’t Democracy Slowed Rising Inequality? (Bonica, McCarty, Poole, Rosenthal)
Democracy hasn’t slowed the rise in inequality because of a political acceptance of free-market capitalism, immigration and a low turnout of poor voters, rising real income and wealth making social insurance less attractive, money influencing politics, and distortion of democracy through gerrymandering.
Billionaire Bonanza (Collins, Hoxie)
The people at the top are crazy rich and we should tax them.
More on free markets
Economic Freedom, Institutional Quality, and Cross-Country Differences in Income and Growth (Gwartney, Holcombe, Lawson)
More economic freedom leads to more rapid growth and higher income levels.
Economic Freedom of the World: 2017 Annual Report (Gwartney, Lawson, Hall)
Economic freedom is strongly correlated with rapid growth, higher average income per capita, lower poverty rates, higher income amount/share for the poorest 10%, higher life expectancy, more civil liberties and political rights, more gender equality, greater happiness, and better access to electricity, gas, and water supplies.
Agent-Based Simulations of Subjective Well-Being (Baggio, Papyrakis)
Economic growth weakly correlates with happiness, and pro-middle and balanced growth correspond to much higher levels of long-term happiness than pro-rich growth.
Decline of income inequality
Deconstructing the Decline in Inequality in Latin America (Lustig, López-Calva, Ortiz-Juarez)
Income inequality declined in Latin American countries because of a declining skill premium and government redistribution.
Global Inequality Dynamics: New Findings from WID.world (Alvaredo, Chancel, Piketty, Saez, Zucman)
China’s top 1% income share has risen since 1980 (partially due to privatization), peaked near 2006, and is stable/slightly declining.
The great Chinese inequality turnaround (Kanbur, Wang, Zhang)
Drop in Chinese inequality is due to tightening of rural labor markets from migration, government investment in infrastructure in the rural sector, minimum wage policies, and social programs.
Views on inequality
The Challenge of Shared Prosperity (Rivkin, Mills, Porter)
Business leaders care about inequality, and it’s in their perceived self-interest to reduce inequality.
How Much (More) Should CEOs Make? A Universal Desire for More Equal Pay. (Kiatpongsan, Norton)
Everybody across all socioeconomic classes wants less inequality.
Minimum Wages and Employment (Neumark, Wascher)
Most studies show that minimum wages reduce employment of low-wage workers.
The Effects of a Minimum-Wage Increase on Employment and Family Income (Congressional Budget Office)
Increases in minimum wage would cause unemployment but have a net positive real income effect.