Lecture 23 Slides Long

Increases in educaeon tend to decrease inequality in

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Unformatted text preview: 928 1923 0% 1918 Top 10-5% (incomes between $108,000 and $150,000) 1913 Share of total income accruing to each group 25% The Race between EducaEon and Technology •  Technological change tends to increase inequality. •  Increases in educaEon tend to decrease inequality. •  In the 1950s and 1960s, the two forces roughly balanced. •  StarEng around 1970, increases in educaEon slowed, so the effects of technological change dominated. Other Factors that May Have Contributed Somewhat to the Rise in Inequality •  Weakening unions and falling relaEve minimum wages. •  Increases in internaEonal trade. •  Changes in social norms. 45% 40% 35% 30% Including capital gains Top Decile Income Share, 1917–2010 2007 2002 1997 1992 1987 1982 1977 1972 1967 1962 1957 1952 1947 1942 1937 1932 1927 25% 1922 Excluding capital gains 1917 Top 10% Income Share 50% II. IS INEQUALITY A SOURCE OF RECESSIONS AND/ OR FINANCIAL CRISES? Two Views of the Role of Inequality •  Inequality is important for many things, but it is not central to understanding short ­run fluctuaEons and financial crises •  High levels o...
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