Ep. 16: The anatomy of inequality

More and more of the wealth in the richest countries is going to their richest citizens. And there are no signs that it’s stopping. But how inequality has grown—who it’s affecting and why—has changed significantly over the last four decades, according to a paper in the Fall issue of the Journal of Economic Perspectives. Authors Florian Hoffmann, David S. Lee, and Thomas Lemieux say that since 2000 income inequality in the US has shifted more to the top of the income distribution and that income from capital has grown more important. But these patterns differ across European countries—a sign that inequality is a policy choice.  If policymakers want to close this growing gap between the haves and the have nots, Hoffman says better education will be key. Hoffman recently spoke with the AEA’s Tyler Smith about the anatomy of inequality in advanced economies, the many potential factors behind its growth, and how COVID-19 could exacerbate the problem.