Answer to Question #25437 in Macroeconomics for Jimmy Vo

Question

Give five reasons that the income distribution in the United States has become more unequal in the last several decades. Do you regard this as a problem for society? Why or why not?

Answer 1

Incomes have become more unequal in the United States for three primary reasons:

• Changes in employment patterns
• Increased returns to education
• Changes in households

First reason is really a problem for the society, the percentage of workers who belong to a labor union decreased dramatically in the past 30 years. That in itself results in a lower wage for millions of workers, because unions exist to push wages upward, and they usually succeed.

But the other two reasons are not so critical for the society.