Financial Mathematics Text

Sunday, December 16, 2012

Income Inequality in the US

Here's income inequality in one simple chart.

Real Growth in income from 1960:

Calculated via data from here.

The darker blue line representing Real GDP/Capita gives a decent representation of productivity growth over the last 50 years. It's clear that the top 1% (and more specifically, the top 0.1%) took the largest share of that productivity growth. This led to the bottom 95% to lag overall productivity growth.

While real growth in income has averaged a factor of 2.7x 1960 levels, the top 1% and 0.1% have seen their income grow 3.3x and 5.6x 1960 levels, respectively. Meanwhile, the bottom 95% have not even seen their income double.

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