In a new analysis of the World Income Database published by the National Bureau of Economic Research, Thomas Piketty and colleagues from the Paris School of Economics and UC Berkeley, describe a "collapse" of the share of US national wealth claimed by the bottom 50% of the country -- down to 12% from 20% in 1978 -- along with an (unsurprising) drop in income for the poorest half of America.
The authors contrast this situation with the UK, France and China, and find that income inequality is much less stark in other countries -- in France, the poorest 50% saw income growth of 39% over the same period (even though France also became more unequal over that time).
Piketty's Capital in the 21st Century made waves in global policy circles by carefully quantifying the widening wealth gap by assembling three hundred years' worth of global economic data; Piketty hypothesized that the gap was due to the fact that market economies usually deliver higher dividends than growth -- that is, markets make investors richer than innovators, so the richest people are most likely to be inheritors, not people who delivered growth through new processes and products.
To conclude, we stress that global inequality dynamics involve strong and contradictory forces. We observe rising top income and wealth shares in nearly all countries in recent decades. But the magnitude of rising inequality varies substantially across countries, thereby suggesting that different country-specific policies and institutions matter considerably. High growth rates in emerging countries reduce between-country inequality, but this in itself does not guarantee acceptable within-country inequality levels and ensure the social sustainability of globalization. Access to more and better data (administrative records, surveys, more detailed and explicit national accounts, etc.) is critical to monitor global inequality dynamics, as this is a key building brick both to properly understand the present as well as the forces which will dominate in the future, and to design potential policy responses.
Global Inequality Dynamics: New Findings from WID.world [Facundo Alvaredo, Lucas Chancel, Thomas Piketty, Emmanuel Saez, Gabriel Zucman/National Bureau of Economic Research] [Free version, requires Tor browser
Income share for the bottom 50% of Americans is ‘collapsing,’ new Piketty research finds [Steve Goldstein/Marketwatch]
(via Naked Capitalism)