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United States Income, Wealth, Consumption, and Inequality$
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Diana Furchtgott-Roth

Print publication date: 2020

Print ISBN-13: 9780197518199

Published to Oxford Scholarship Online: December 2020

DOI: 10.1093/oso/9780197518199.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 18 October 2021

The Economics of Inequality in High-Wage Economies

The Economics of Inequality in High-Wage Economies

(p.262) 10 The Economics of Inequality in High-Wage Economies
United States Income, Wealth, Consumption, and Inequality

Edward Conard

Oxford University Press

The advent of information technology opened a window of investment opportunities that has exceeded the supply of properly trained talent while trade with low-wage economies, low-skilled immigration, trade deficits, and aging demographics have relieved constraints to low-skilled labor and risk-averse savings. As the economy devotes more resources to raising the productivity of talent, low-skilled productivity and wage growth have slowed. With a constrained supply of risk-reducing talent allocated to more productive endeavors, an unconstrained supply of risk-averse savings has lowered interest rates. With improbable innovation needed to capitalize on the value of information, high returns to success have fortunately motivated increased risk-taking, despite the declining productivity of innovators. Proponents of income redistribution have concluded that high returns to success and slowing productivity growth, despite low interest rates, are evidence of rising cronyism, notwithstanding extensive evidence to the contrary. This chapter provides an alternative explanation.

Keywords:   macroeconomics, income inequality, 1 percent, constraints to growth, productivity, risk, intangible investment, information technology, innovation, cronyism

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