Social Sciences
5 years ago

Productivities Drive Income Inequality: Preferences Play Increasing Role Over Time

American Economic Journal Economic Policy
Using Labor Supply Elasticities to Learn about Income Inequality: The Role of Productivities versus Preferences
Katy Bergstrom, William B. Dodds

Paper Summary

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The article explores how differences in people's abilities and preferences for work affect income inequality in the US. By analyzing how much people work and earn, researchers found that productivity levels mainly drive income inequality. However, personal preferences also play a role, especially when income has a big impact on how much people work. This study helps us understand why some people earn more than others and how factors like skills and work choices contribute to income inequality.