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Income for bottom 50% of Americans collapsing - in China up 401%

Staff Writer | February 10, 2017
A new research paper from economists finds that the bottom 50%’s share of income in the United States is “collapsing.”
America income
America   Something is wrong in the U.S.
In the U.S., between 1978 and 2015, the income share of the bottom 50% fell to 12% from 20%. Total real income for that group fell 1% during that time period.

In China — where there also has been a marked rise in income inequality — the bottom 50% saw their income go up by 401% between 1978 and 2015, not surprising given the industrialization the world’s second-largest economy has seen.

Even in developed France, however, the bottom 50% saw their income grow, by 39%.

Like income, wealth also has become more concentrated around the world.

The economists say that the varying magnitude suggests different country-specific policies and institutions matter greatly.

They say the findings suggest “policy discussions about rising global inequality should focus on how to equalize the distribution of primary assets, including human capital, financial capital, and bargaining power, rather than merely discussing the ex-post redistribution through taxes and transfers.”

They also call for policies to improve education and access to skills, reform labor-market institutions including the minimum wage and worker bargaining power, and “steeply progressive” taxation.