by Scott Winship
e21 – Economic Policies for the 21st Century
April 30, 2014
Has income concentration soared in the United States in recent decades? Many believe the evidence leaves no doubt that income concentration has increased. Thomas Piketty devotes most of Part Three of his celebrated Capital in the Twenty-First Century to an examination of inequality trendlines. But research on American income concentration raises substantial doubts about the degree to which income has become more concentrated. Incomes below the top ten percent have grown more in the U.S. than Thomas Piketty thinks, and it may well be that incomes at the top are growing less than he believes. At the least, the U.S. is probably less distinctive in its income concentration than Piketty suggests. Because many of the flaws of tax return data generalized to other countries, readers should approach his conclusions and policy recommendations with skepticism. More and better evidence is necessary before declaring economic inequality the fundamental policy challenge of our time.