Income and Wealth Inequality

Abstract

According to the author of this chapter, the first job of economists is to enlighten the debate on income and wealth inequality by providing transparent measures that the broad public can understand. Once inequality is appropriately measured, we can then understand the drivers of inequality trends and the effects of public policy on inequality. Drawing on the author’s previously published works, this chapter presents evidence on US income and wealth inequality. It presents series for top income and wealth shares and for the distribution of economic growth by income groups. The author discusses the mechanisms behind the evolution of US income and wealth inequality from historical and comparative perspectives and analyzes the role of public policy and, in particular, taxation in the evolution of inequality.