Kevin Lansing, Agnieszka Markiewicz, 21 April 2018

The increase in US income inequality since 1970 largely reflects gains made by households in the top 20% of the income distribution. The framework presented in this column shows that households outside of this group have suffered significant losses from forgone consumption, measured relative to a scenario that holds inequality constant. A substantial mitigating factor for these losses has been the dramatic rise in government redistributive transfers, which have doubled as a share of US output over the same period.


CEPR Policy Research