Combating Inequality Rethinking Government's Role

Leading economists and policymakers consider what economic tools are most effective in reversing the rise in inequality.

Economic inequality is the defining issue of our time. In the United States, the wealth share of the top 1% has risen from 25% in the late 1970s to around 40% today. The percentage of children earning more than their parents has fallen from 90% in the 1940s to around 50% today. In Combating Inequality, leading economists, many of them current or former policymakers, bring good news: we have the tools to reverse the rise in inequality. In their discussions, they consider which of these tools are the most effective at doing so.

Olivier Blanchard is C. Fred Bergsten Senior Fellow at the Peterson Institute for International Economics and Robert Solow Professor of Economics Emeritus at MIT. He was Chief Economist at the International Monetary Fund from 2008 to 2015. Dani Rodrik is Ford Foundation Professor of International Political Economy at Harvard's John F. Kennedy School of Government and President-Elect of the International Economic Association.

Introduction: We Have the Tools to Reverse the Rise in Inequality xi
Olivier Blanchard and Dani Rodrik
I The Landscape 1
1 Ten Facts about Inequality in Advanced Economies 3
Lucas Chancel
2 Discussion of the Landscape 31
Peter Diamond
II Ethical and Philosophical Dimensions 39
3 Time for New Philosophical Foundations for Economic Theory? 41
Danielle Allen
4 What Kinds of Inequality Should Economists Address? 49
Philippe Van Parijs
5 Why Does Inequality Matter? 59
T. M. Scanlon
III Political Dimensions 65
6 Wealth Inequality and Politics 67
Ben Ansell
7 The Political Conditions Necessary for Addressing Inequality 75
Sheri Berman
8 The Political Obstacles to Tackling Economic Inequality in the United States 85
Nolan McCarty
IV The Distribution of Human Capital 91
9 A Modern Safety Net 93
Jesse Rothstein, Lawrence F. Katz, and Michael Stynes
10 Education’s Untapped Potential 99
Tharman Shanmugaratnam
V Policies toward Trade, Outsourcing, and Foreign Investment 107
11 Why Was the “China Shock” So Shocking—and What Does This Mean for Policy? 109
David Autor
12 Trade, Labor Markets, and the China Shock: What Can Be Learned from the German Experience? 117
Christian Dustmann
13 Combating Inequality: Rethinking Policies to Reduce Inequality in Advanced Economies 125
Caroline Freund
VI The (Re)distribution of Financial Capital 135
14 How to Increase Taxes on the Rich (If You Must) 137
N. Gregory Mankiw
15 Would a Wealth Tax Help Combat Inequality? 141
Lawrence H. Summers
16 Should We Tax Wealth? 153
Emmanuel Saez
VII Policies That Affect the Rate and Direction of Technological Change 161
17 Could We and Should We Reverse (Excessive) Automation? 163
Daron Acemoglu
18 Innovation and Inequality 171
Philippe Aghion
19 Technological Change, Income Inequality, and Good Jobs 177
Laura D’Andrea Tyson
VIII Labor Market Policies, Institutions, and Social Norms 193
20 Gender Inequality 195
Marianne Bertrand
21 Ownership Cures for Inequality 201
Richard B. Freeman
IX Labor Market Tools 211
22 Guaranteeing Employment for All 213
William Darity Jr.
23 Making Work Work 219
David T. Ellwood
24 The Importance of Enforcement in Designing Effective Labor Market Tools 227
Heidi Shierholz
X Social Safety Net 235
25 Enhancing Micro and Macro Resilience by Building on the Improvements in the Social Safety Net 237
Jason Furman
26 The Social Safety Net for Families with Children: What Is Working and How to Do More 245
Hilary Hoynes
XI Progressive Taxation 253
27 Reflections on Taxation in Support of Redistributive Policies 255
Wojciech Kopczuk
28 Why Do We Not Support More Redistribution? New Explanations from Economics Research 263
Stefanie Stantcheva
29 Can a Wealth Tax Work? 271
Gabriel Zucman
Contributors 277
Index 279