Home | Business News | Browse by Publication | P | Public Interest

The roots of inequality. (Review).(The Causes and Consequences of Increasing lnequality)-

Article Excerpt
DEBATES about the poor, it seems, will always be with us. The pendulum swings between the argument that poverty results from lack of opportunity and the view that it is the fault of the poor themselves. These disagreements are well illustrated in three recent books with three radically different interpretations of the same reality. I wish I could say that each of these books contains, in equal measure, a piece of the truth. But they vary not only in their diagnoses but also in the degree to which their evidence and arguments convince.

In The Causes and Consequences of Increasing lnequality, + edited by the economist Finis Welch, an impressive array of scholars sets out to dissect wage disparities in the United States. According to painstaking research by Claudia Goldin and Lawrence Katz, pay differentials narrowed from the late nineteenth century until the middle of the twentieth century, with most of the compression occurring during the two world wars. During the second half of the century, this trend stalled or reversed. From about 1970 until the middle of the 1990s, skilled workers--those with the most education--leaped ahead, while the wages of lower-skilled employees stagnated or declined. Although little discussed in this book, these wage disparities translated into growing income inequality--a trend that was exacerbated by simultaneous changes in family composition. The growth of single-parent families at the bottom of the income distribution and of two-earner couples at the top magnified the effect of increasing disparities in wag es and individual earnings. In the mid 1990s, the tide turned again. A booming economy at the end of the decade helped to raise wages at the bottom and stopped the inequality train in its tracks.

This change, however, in no way reversed the damage done over the preceding 25 years. So, at the beginning of...