Permanent Inequality

Income inequality has been rising in the United States.  A paper submitted to the Brookings Panel on Economic Activity analyzes tax returns from 1987 to 2009 to show that changes in inequality are increasingly permanent rather than transitory.  This means it is harder for someone to bounce back from a bad year for income.

In his book Applied Economics, Thomas Sowell cited statistics from 1991 in support of income mobility.  An important part of the American creed is the notion of pulling oneself up by the bootstraps.  The new paper suggests this may no longer be as easy as it might have been. Editor and University of Michigan economics professor Justin Wolfers is quoted:

The rich are getting richer and staying richer.  The poor are getting poorer and staying poorer.