12,224.55-127.8
Stock Analysis, IPO, Mutual Funds, Bonds & More

Economica: Income inequality - Is it transitory or permanent?

According to the report, Men's earnings have become increasingly volatile over two year periods. This has big implications for the American economy.

ET Bureau|
Updated: Mar 29, 2013, 05.33 AM IST
0Comments
According to the report, Men's earnings have become increasingly volatile over two year periods. This has big implications for the American economy.
According to the report, Men's earnings have become increasingly volatile over two year periods. This has big implications for the American economy.
It's one study that Indians wouldn't want to conduct for the fear of more bad news. A Reuters report cites a new paper, that looked at American male and household earnings, and found out that income inequality is increasingly permanent. (The study didn't break out women's income.)

"Rising Inequality: Transitory or Permanent?," which was submitted as part of the Brookings Papers on Economic Activity, looks at pre- and after-tax incomes from 1987 to 2009 and finds some disturbing trends.

According to the report, Men's earnings have become increasingly volatile over two year periods. This has big implications for the American economy: It's one thing to lose your job, get a new one, and get by on a slightly lower income. It's an entirely other thing for your income to swing wildly from year to year.

The report goes on to say that, the study's authors find that the effects of this variance are increasingly lasting. They differentiate between "transitory inequality" and "permanent inequality."

The report further mentions that the former might come from getting laid off in a bad economy or from people moving up the economic ladder by pulling in higher salaries. Permanent inequality, the authors find, is the key driver of the growth in income inequality for men.

Worse, "for household income, both before and after taxes, the increase in inequality over this period was predominantly, although not entirely, permanent," the study's authors find. We have a hunch that we might know the results for the Indian study already.

Also Read

Jamie Dimon laments income inequality, won’t assail CEO pay

'Industry 4.0 may lead to social upheavals, income inequality'

Income inequality to rise further, jobs remain a chimera: Study

Income inequality in India lowest among emerging nations: OECD

Comments
Add Your Comments
Commenting feature is disabled in your country/region.

Popular Categories


Other useful Links


Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service