Economics of Inequality
Over the past 30-40 years, inequality has significantly increased in most developed economies and has virtually exploded in the United States. The causes and consequences of this heightened inequality are of great interest to social scientists and political actors. In this course, we will review the history of inequality and the manner in which it has been addressed by economists. We will investigate potential consequences for economic dynamism and political democracy of ever-increasing wealth and income disparities and declining social mobility. This will form a foundation from which we can discuss questions that are especially poignant for contemporary societies and policy makers. Why do some groups see record increases in wealth and income, while others see theirs stagnate or decline? Is there an optimal level of inequality? If so, what is it? What sorts of policies can help achieve that level, and to what extent is inequality determined by deeper economic factors like technology and historical patterns of education and wealth? The first part of the course will explore different ways in which to measure and conceive of inequality and its historical trends both within and between countries. In the second part, we will discuss and analyze theories of inequality from neoclassical, Marxian, institutionalist, and other perspectives. Finally, we will examine the sources and consequences of inequality, including potential policy solutions. This will entail delving into relevant research from other social science disciplines such as psychology and sociology.