Branko Milanovic — Rising capital share and transmission into higher interpersonal inequality

The capital–income ratio continues to rise. This increases interpersonal inequality when three conditions are met (as they are in all rich economies today): the rate of return to capital outstrips that of income, income from capital is concentrated among the rich, and the income source that is less equally distributed is correlated with overall income. This column argues that the third condition is not inevitable, and that policies to share income from capital more equally would decrease overall inequality. We have tools to do this, but policymakers lack the political will.

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Rising capital share and transmission into higher interpersonal inequality
Branko Milanovic | Visiting Presidential Professor, Graduate Center, University of New York and Senior Scholar, Luxembourg Income Center