Inequality in the Distribution ofIncome and Wealth: Trends, Drivers and Impacts

Chapter 3 explores the rapid and alarming rise of inequality over the last 4-5 decades. The secular decline in the wage share of income since the 1970s is first documented, and its causes are outlined. Among the latter, particular attention is paid to deunionization and the consequent loss of workers’ bargaining power - factors that, in the US and elsewhere, have made the declining wage share one of the new ‘stylized facts’ of advanced capitalism. This has contributed to significant increases in personal income inequality, additional causes of which include the decline of progressive taxation and increases in wage inequality resulting from the rise of the ‘working rich’. Rising income inequality is then shown to have been accompanied by increasing concentration in the distribution of wealth, following which the analysis of these various sources of increased inequality that was initiated by Thomas Piketty is subject to critical examination. The chapter closes with a discussion of distributive justice from a (neo)liberal point of view, and the cases for and against intervening in the economy to redress recent trends towards steadily increasing inequality in both income and wealth.