Inequality in the Distribution of Income: Trends and International Comparisons

Economic theory alone does not establish any basis for preferring a more or less equal distribution of income. Nonetheless, a common aim of policy is promoting equality of opportunity. An extremely unequal distribution of income may be considered an indication of a lack of equal opportunity. Arguments for a more equal distribution of income than that which would result from market forces are based on a number of propositions. One is a common assumption made in economic analysis known as diminishing marginal utility of income. This is the notion that each additional dollar of income yields less utility, or satisfaction. If the assumption of diminishing marginal utility of income is accepted, then, in theory, it should be possible to increase the overall well-being (utility) of society by taking some from those with high incomes and giving it to those with low incomes. A second, noneconomic, justification for policies designed to make the income distribution more equal is concern that society prevent its members from falling below some minimum standard of living. Existing measures of income fall well short of an ideal that would accurately indicate how well off individuals or households are. Not all kinds of income are counted. Taking the existing measures at face value, however, several observations can be made. First, the distribution of income in the United States has become increasingly unequal since the late 1960s. Second, the U.S. income distribution is the most unequal of all major industrialized countries. Some of the greater income equality found in other major industrialized countries may be due to the fact that government transfers are more directly targeted at lower income households. The distribution of earnings is more unequal than is the distribution of household income. Of particular interest is that the gap in earnings between highly educated or skilled workers and less skilled workers has grown substantially. Explanations focusing on world trade and national demographics have been suggested, but the one most widely accepted is that technological advances in recent years have increased the demand for more highly skilled labor relative to its supply. Policies that boost the supply of skilled workers would thus seem likely to narrow that gap and act as an equalizing influence on the income distribution. But, the large gap in pay between skilled and unskilled workers that has developed would itself seem to be a substantial incentive for prospective and current workers to expand their education and training. This report will be updated as developments warrant

Inflation and Unemployment: What is the Connection?

CRS_April_2004_Inflation_and_Unemployment.pdf: 91109 downloads, before Oct. 1, 2020

FACTORS AFFECTING U.S. DEMAND FOR REDUCED-FAT FLUID MILK

U.S. fluid milk consumption has changed dramatically since the early 1970s. Whole milk accounted for over 81% of commercial fluid milk disappearance in 1970. By 1993, this percentage was less than 39%. A three-equation fluid milk demand system is estimated for fluid milks that vary by fat content. The household panel data set used includes over 4,300 households that recorded fluid milk purchased for at-home consumption over a 12-month period. Given that many of these households did not consume one or more of the three milk types, the econometric model explicitly incorporates the censored nature of these commodity demands. Own- and cross-price and substitution estimated along with effects of household demographic characteristics.Demand and Price Analysis,

Null Cones in Lorentz-Covariant General Relativity

The oft-neglected issue of the causal structure in the flat spacetime approach to Einstein's theory of gravity is considered. Consistency requires that the flat metric's null cone be respected, but this does not happen automatically. After reviewing the history of this problem, we introduce a generalized eigenvector formalism to give a kinematic description of the relation between the two null cones, based on the Segre' classification of symmetric rank 2 tensors with respect to a Lorentzian metric. Then we propose a method to enforce special relativistic causality by using the naive gauge freedom to restrict the configuration space suitably. A set of new variables just covers this smaller configuration space and respects the flat metric's null cone automatically. In this smaller space, gauge transformations do not form a group, but only a groupoid. Respecting the flat metric's null cone ensures that the spacetime is globally hyperbolic, indicating that the Hawking black hole information loss paradox does not arise.Comment: groupoid nature of gauge transformations explained; shortened, new references, 102 page