Income inequality is driven by both political and economic forces and it waxes and wanes over time. In my just-published book, "Global Inequality: A New Approach for the Age of Globalization," I introduce the concept of Kuznets waves to describe this rise and fall.
The name comes from the famous American economist Simon Kuznets, who in the 1950s and 1960s argued that as societies underwent the Industrial Revolution they become more unequal, with labor moving from agriculture to industry. This is followed by a period of declining income inequality as highly educated labor becomes more plentiful and social transfers increase. So it seemed that the rich countries were destined to become more egalitarian and stay that way.
But Kuznets' theory ran into trouble in the past three decades as inequality rose in almost all developed countries, with the technology revolution playing the role of the Industrial Revolution and labor moving from well-paying manufacturing to less-remunerative services. Thus the broad forces pushing up U.S. inequality remain dominant. There are five specific forces to consider:
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