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Income InequalityWhy It Matters and Why Most Economists Didn't Notice$
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Matthew P Drennan

Print publication date: 2015

Print ISBN-13: 9780300209587

Published to Yale Scholarship Online: May 2016

DOI: 10.12987/yale/9780300209587.001.0001

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Possible Causes of Rising Income Inequality

Possible Causes of Rising Income Inequality

(p.20) III Possible Causes of Rising Income Inequality
Income Inequality

Matthew P. Drennan

Yale University Press

Why has income inequality risen so much? Economic causes and demographic causes are less important than institutional and political causes. Key economic causes are globalization, skill-biased technological change, and job polarization. All the rich countries are subject to those economic trends, but the United States has experienced the sharpest rise of inequality. Demograhic factors, such as highly educated men marrying highly educated women, contribute to rising income inequality, but such forces only account for 15 percent of the observed rise. Institutional factors—the drastic decline in the power of labor unions—and political factors are the most important forces raising income inequality.

Keywords:   Globalization, SBTC, Job polarization, Labor unions, Lobbying, politics

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