The Top 1 Percent in International and Historical Perspective - Annotated Bibliography Example

Income Distribution Alvaredo, Facundo, et al. "The Top Percent In International And Historical Perspective." Journal Of Economic Perspectives 27.3 (2013): 3-20. The authors of this article observe a sharp increase in the top 1 percent increase in top income shares in America in comparison to European countries. All the advanced countries benefit from globalization, new technologies to enable them experience top one income share in the twenty first century. Some of the factors that affect the top 1 percent include impact of tax policy, richer view of the labor market, capital income, and the correlation between earned income and capital income. The top tax rates move in the opposite direction from pre-tax income shares. The second factor is the labor market that contrasts the standard supply model with the alternative possibility of bargaining power. Tax cuts lead to managerial energies that divert the remuneration expense at the expense of employment. On capital income, the authors cite that Europe adheres to a U-shaped model that inherits wealth through capital income taxation that curbs inequality. The controversy surrounding income inequality attributes to technological change and globalization. On the issue of inherited wealth, the author observes difference in magnitude across countries. The existing estimates show differences between the French U-shaped patterns that apply to Germany. The wealth surveys tend to underestimate inheritance receipts and that explains the reason behind the rise of inheritance flows in the recent period that appears limited in some countries. The variations in the total magnitude of wealth accumulation also explain the variations between the countries. The authors use different approaches to explain the differing experience in other advanced economies. The rise in the share of the top 1 percent has a noteworthy effect on the overall income inequality in America. During the First World War, the authors find that economic growth accompanies a rise in inequality and a decline in inequality. An interwar period fails to exhibit secular downward trend in the shares of top incomes. In the issue of tax rates that authors find consistency of tax rates that contribute to the earlier decline in the top income shares. The decline in the top capital incomes is the primary driver of top income shares in the early twentieth century. Lastly, the authors talk concerns earned income and capital income. The joint distribution of earned income and capital income compares with a Ricardian model. The pattern of crossing represents the copula that illustrates joint distribution in terms of ranks in the distribution of capital and earnings income. Saez, Emmanuel, and Michael R. Veall. "The Evolution Of High Incomes In Northern America: Lessons From Canadian Evidence." American Economic Review 95.3 (2005): 831-849. The authors of the article states that income equality in the course of process development attracts enormous attention in the world of economics as well as political domain. Income tax statistics is the only source of income distribution that extends to the period and the upper income groups. The study sheds light on three different issues concerning Canadian income tax statistics starting from 1920s to produce a uniform series of income shares and income composition in the upper income groups. The authors of the study suggest that a recent increase in the cross-sectional income associates with lifetime resources and welfare. The Canadian micro-data displays income concentration on the family and individual levels. The Canadian inequality research largely finds that Canadian earning inequality increase since 1980. The decline in income of the top income earners does not constitute large fortunes during the prewar period. The author of this article uses personal income data to construct a uniform series of top income in shares in Canada during the twentieth century. The author notes that the top incomes of Canada and America experience drastic drop during the Second World War and do not have recovery until 80s. The recent increase in income concentration does not associate with increased mobility at the top of income distribution in Canada. American and Canada experiences similar top income shares and have since recovered from postwar income levels. Most of the modern day employees largely replace capital income earners at the top of the income distribution in Canada and America. The Canadian experience helps one to understand the importance of taxation to explain the recent increase in top income shares in America. The author believes that in the 60s Canada has a modest surge of top incomes in comparison to America. During that period, Canada has a transparent income analysis free from plagues in the private or corporate entities and that makes United States hard to interpret. The concentration of the surge in the last decade among the top income shares suggests that tax changes in Canada is not the only cause. The author cites that it is wrong to rely on the short-term fluctuation of tax changes in Canada while concentrating on the top wages in the country. It is possible that migration of experts and brain drain explanation drives the surge of top wage shares in Canada. . The author does not provide a credible explanation on the reason for surge in the first place in America. Corak, Miles. "Income Inequality, Equality Of Opportunity, And Intergenerational Mobility." Journal Of Economic Perspectives 27.3 (2013): 79-102. According to the author, freedom of speech, ability to accomplish everything through hard work and an ability to succeed regardless of harsh economic recession does not make the American Dream a defining metaphor of the country. Americans tolerate income inequality a concept called prospect of upward mobility. Intergenerational mobility is lower because children of the top-earning parents are more likely to become top earners. The era of rising inequality heightens differences and an upward mobility on the least advantaged children in America. The cohort of children living in America in 80s will likely experience intergenerational income mobility than previous cohort raised in the era of less inequality. The author of the study notes that inequality will lower mobility since it shapes opportunity. The inequality will hasten the income consequences on innate differences of the individuals. Additionally, the inequality will change incentives, institutions, opportunities, and skills in the labor market. People that care about equality of opportunity care about inequality of outcomes. Parents can transmit economic advantages by them establishing social connections that facilitate admissions to schools, access to sources of human capital, and access to jobs. Parents can also influence longevity of life through genetic transmission of innate ability, personality, and other crucial aspects of health. Similarly, parents have the capability of influencing the lifetime earnings prospects of children in different children using family culture, aptitude, behavior, behavior, and other forms of investment. In terms of equal opportunity, people have a tendency of having a level playing field to access employment and education while counterbalancing within-family properties. The author observes the difficulty of changing the degrees of mobility in countries like Denmark or United States. The cross-country comparison of the intergenerational mobility offered by Great Gatsby Curve reflects on the underlying drivers of change. The inequality article on intergenerational repercussions pays little attention to the increase of top income shares. The author argues that top 1 percent is different from one generation to another that involves higher-quality schooling and other investments of human capital that also entail nepotism. Children at the top earners have the possibility of remaining so as adults. Countries that combine intergenerational mobility with higher top shares strive for a balance between higher top shares and labor market inequalities. United States income distribution experiences worth mentioning growth that will promote the capacities of their children. Many in American support and recast the public policy of the nation that will help them meet the need in upward mobility to the people at the bottom. Kaplan, Steven N, and Joshua Rauh. "Its The Market: The Broad-Based Rise In The Return To Top Talent." Journal Of Economic Perspectives 27.3 (2013): 35-56. The authors of the article state that rise of inequality in 80s have to do with the increase of managerial power that allows the top executives to receive high pay. Currently there are no social norms against higher pay levels as the tax policy affects distribution of surpluses between the employers and the employees. Inequality in pretax income measures income share of top 1 percent that increases substantially in America since 80s. A rise in the after-transfer income of the top 1 percent becomes an all time high in 200s. The issue has precipitated controversy for a long time and has two divisions. One of the categories argues that the rise in inequality is due to top earners that obtain new ways to extract additional income. Some of the theories in this category include theories of managerial power, social norms, and the changes of marginal tax that alter incentives for the managers that seek high income for themselves. Most of the theories depict top earners that extract resources in the excess of marginal products. In the other category, the increase in inequality drives by economic factors that alters marginal productivity on different types of labors includes explanations of greater inequality sing technological based skill. In most of the theories, the top earners have unique and scarce talents that permit them to command at a fee due to the increase value of talents in the markets at an increasing size. The results of the study tend to support the extraction hypothesis that corporate governance deteriorates in a way to permit top executives to increase their compensation in a substantial way. The evidence of the author is that poor corporate governance will increase income inequality at the upper end of distribution. Another extraction theory argues that high earners have a greater incentive to extract from the lower earners on a low marginal tax rate since they keep a larger share of the returns from the bargaining activity. The fortunes of the wealthiest in America that develop new technologies are a sign of insensitivity towards the low-wage employees. The top 1 percent share in the wealth distribution is much more stable than income distribution and the rise in the share of after-tax a suggestion that top earners do not intend to keep the income gains. Osberg, Lars. "Instability Implications Of Increasing Inequality: Evidence From North America." Economic Modelling 35.(2013): 918-930. The authors of the article stress on the implications of increasing inequality at the different rates of growth United States and Canada. Authors of the article note of huge changes in American and Canadian labor markets in comparison to 1980s. Cohorts of new immigrants arrived and both countries relied on new technologies to grow more capitals and deregulate labor market with less protection of tariff barriers and protection of unions. The total disposable annual income of households depends on the hours of labor supplied that correlate with the income of households. Currently, the Canadian and American markets have the ability of supplying more hours of work to the paid labor market to increase the variance of hours in every week. The authors of the article observe trends of inequality at different stages of development. The structural shifts of economic development such as increase in female employment, decline in birth rates, and the establishment of social welfare system have influence on the lower and middle segments of income distribution. Structural shifts in income led to less urbanization, low levels of education, female labor force participation, and improvement of social transfers. The authors’ argument is that the single most factor that led to increasing inequality is the rapid growth since 1980s in the real incomes of the top percentiles combined with income share at the top. In the short run, aggregate demand maintained the savings of the wealthy and lent to the stagnant incomes to increase indebtedness leading to financial fragility. The trend in American and Canada to rising income inequality leads to a periodic financial crisis, greater volatility as the government responded to mass unemployment coupled with counter-cyclical policies and compounding instability of public finances. The conundrum of inequality-induced macro-economic stability called the positive income tax system helped curb imbalances in the financial flows. Peters, David J. "Place-Based Income Inequality Clusters In The Rural North Central Region, 1979–2009." Applied Economic Perspectives & Policy 33.2 (2011): 222-240. The author of the article observes that up until 1980s, United States experienced a period of rising incomes and relative income distributions that began after the Second World War. Over the past three decades, income begun to level off and income distributions became unequal. During the economic boom in the 1990s, Americans became more prosperous as income inequality remained high and increased. The author of the article explores the non-metropolitan income inequality across sub county geographies and multiple times. The purpose of this analysis is to identify and describe clusters of persistent low and high incomes in rural areas to necessitate an exploratory focus other than predictive. The aim of the study is to create a statically typology of income across time in the North Central Region. The analysis is new and unique in terms of space and geographical scales. It is distinct in terms of the methods used; cluster analysis that will identify statistically clusters of persistent income inequality. The study enables one to understand income inequalities that increase in the North Central Region and United States in the past 30 years. The growth of inequality that increases in the past three decades varies a lot across different states and regions. Understanding the dynamics of the region is crucial to inform public policy aimed at promoting social and economic integration where inequality is one of the indicators. The results will inform rural development policy at the state and federal levels. The analysis fills the answer to the existing gap by specifically examining income inequality across Sub County in the non-metropolitan areas to compliment the poverty rates across the same geographical scales. Low inequality in 1979-2009 has persistent inequality to indicate a rise in income inequality. High rates of poverty and high rates of inequality operates in opposite directions instead of the same direction. Read More