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Week 6: October 1-5

I recently read an article about income inequality on the National Bureau of Economic Research webpage.

The article reviewed a working paper by two Northwestern University professors titled, “Controversies about the Rise of American Inequality: A Survey.” The survey encompassed several aspects of income inequality, including:

*geographical inequality

*changes in labor’s share of income

*labor mobility and inequality at the bottom of the income distribution

*inequality at the top of the income distribution

*skill-biased technical change

*consumption inequality

One of the main topics discussed was the reason that the rich have become so much richer. The authors distinguished between wealthy people with market-driven incomes (high-income professionals, such as bankers and lawyers) and wealthy CEOs, whose incomes are chosen by their peers. The professionals’ incomes are increasing, but they are driven by the market. CEO income is increasing, but it is not driven by the market. The authors concluded that income inequality is growing even among the top 10% of earners.

You can read the article for yourself by clicking here.

One Comment

  • Steven Greenlaw

    In what way are CEOs incomes chosen by their peers?

    Where does Bill Gates fit into the schema the article describes?

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