Relatively long time readers of this blog may recall that four and a half years ago I wrote a 9,000 word review of a major book by Thomas Piketty, Capital in the Twenty-first Century. Piketty’s work was based on research he carried out with Emmanuel Saez. Today, Paul Krugman linked in Op Ed essay to a new journal article by Piketty, Saez, and a young Assistant Professor, Gabriel Zucman entitled “DISTRIBUTIONAL NATIONAL ACCOUNTS: METHODS AND ESTIMATES FOR THE UNITED STATES.” I have just spent most of the morning reading it, and I strongly recommend it to anyone who wants to dive deeply into the structure of economic inequality in the United States. The growth in inequality in the United States in the last thirty years is astounding. Speaking as an interested amateur, I was especially impressed by the methodological transparency of the essay. The authors make quite clear the places where their data fall short or they are compelled to make ad hoc assumptions not yet supported by evidence or theory. The essay is hard going, at least it was for me, but the picture it paints is compelling. To cite just one among many conclusions of the essay, since the 1980s, the bottom half of the adult population has experienced no aggregate growth in real income whatsoever. What is more, within that group, it is retirees who have experienced real income growth through Social Security and health insurance. The working age portion of the bottom 50% have suffered a significant decline in real income. By the way, the instincts of the Occupy Wall Street protestors were exactly correct. It is the top 1% that has experienced almost all the growth in income over that time.
If you are interested, you can find the article here.