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Is Inequality Growing as American Workers Fall Behind? THERE IS A WEALTH GAP DUE TO FALLING REAL INTEREST RATES NOT DECLINING COMPENSATION

John A. Tatom
Business Economics
Vol. 43, No. 1 (January 2008), pp. 44-54
Stable URL: http://www.jstor.org/stable/23491673
Page Count: 11
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Abstract

This article looks at reasons why income inequality could rise and then explores whether, in fact, workers are losing out. It examines whether workers are falling behind relative to the wealthy and whether real wages have been falling or perhaps only manufacturing wages. It also examines whether there is a growing "wealth gap" and why it could be developing. Finally, it examines the hypothesis that relatively inexperienced or unskilled workers are falling behind. The paper concludes that there is a wealth gap, but that it is due to falling real interest rates not declining compensation. Other indicators of inequality may be growing as well, but it is not because compensation is falling short of rapid productivity growth or because workers are falling behind other income recipients.

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